In contrast to fixed-income, EM equity funds saw a comparatively positive start to 2012, bringing in some $469m for the week ending January 4. It was a different story for LatAm equity funds which suffered some mild hemorrhaging with $66m in net outflows during that period. Still, stock markets put in an impressive performance, with EM and LatAm equity funds up 1.68% and 2.49% for the week ending January 5, according to Lipper. That compares to a more modest 1.36% gain among global small and mid-cap funds.
Category: Equity
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Petroperu Seeks Advisor For Mid Year Share Offering
Peru’s oil company Petroperu is about to launch a formal search for an advisory firm that can structure the sale of a 20% stake in the state-owned company. If all goes as planned, Petroperu should sell shares to the public sometime in June or July of 2012, Edilfredo More, Petroperu’s CFO tells LatinFinance. “We want an advisor to value the company, structure the deal and tell us if the company is ready to go to market of if we need to restructure and strengthen different areas of the business first,” says More. So far Petroperu has no estimated value of the company. More hopes an advisor will also tell the company it can sell the 20% at once or start with a smaller fraction. “We seek to relaunch Petroperu,” says More. Petroperu has already registered with the Lima Stock Exchange, but it remains to be seen if the share sale will give priority to Peruvian investors. The company now controls Peru’s main refining plants and a crude oil pipeline, but it is now seeking to move into the upstream side of the business. The equity offering is expected to help fund the overhaul of Petroperu.
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Struggling Lupatech Gets Capital Lifeline
Brazil’s leading oil industry valve maker, Lupatech, will receive up to a BRL700m ($379.3m) capital infusion as it struggles with a cash crunch and crippling leverage. Lupatech’s top shareholders along with private equity fund GP Investments, have agreed to recapitalize the troubled oil services company as it seeks to increase profitability and pay off debt. Under the agreement, BNDES Participacoes, the holding of the BNDES development bank and Petros, the employee pension fund unit of Brazil’s oil company Petrobras, will initially put up BRL300m ($162.6m) in cash. GP will pay BRL50m also in cash, with the rest to come from other shareholders. As part of the capitalization the company will issue shares to shareholders at BRL4 per share, Lupatech says. Also as part of the deal, Lupatech will absorb the assets of San Antonio International, currently owned by GP Investments, which include drill rigs and well services divisions. Lupatech and GP have estimated an enterprise value of San Antonio Brasil at BRL150m, with BRL100m in debt and BRL50 million in equity. The shareholders are also expected to revamp the Lupatech’s administration, according to a material fact filing. Officials at Lupatech could not immediately offer additional details on the move. Lupatech, the leading oil services provider to Petrobras, has led an aggressive growth through acquisitions that have resulted in elevated levels of debt. Last October Moody’s lowered the company’s rating to Caa2 from Caa1 citing the company’s weak liquidity, high leverage and low profitability. As of June 2011, Ebitda margin for Lupatech stood at 9%, according to Standard & Poor’s. S&P reckons that the company’s BRL1.3bn in debt translated to an Ebitda interest coverage of 0.3x, and a debt to Ebitda of 22.5x at the end of September. S&P analysts expect the company to rollover its credit lines, increase its Ebitda margin to 17% and to bring total debt to Ebitda to 8x in 2012.
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Bradesco Board Oks 15m Share Buyback
Board members of Banco Bradesco agreed on a plan to buy back 15m of the bank’s common and preferred shares. The plan involves buying 7.5m ordinary shares and a similar amount in preferred shares, the bank says. Based on Friday Dec 23 prices for each type of share, the transaction would be worth an estimated BRL424.9m ($228.5m). The bank’s six-month buyback program will expire on June 23, 2012. Officials at the bank could not immediately be reached for additional comment. Bradesco has 502.7m ordinary shares and 1.84bn preferred shares, according to bank data.
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Itau Set for ECM Table Crown
Itau is leading other LatAm ECM shops in volume heading into the final week of 2011, according to Dealogic data. The Brazilian bank had taken credit for 26 offerings worth $3.51bn year to December 16, and was set to beat out Santander ($2.58bn from 15 issues) and Credit Suisse ($2.55bn from 19 deals). The LatAm regional total stood at $30.96bn from 76 deals on the year, down from the $54.07bn seen through 72 transactions in 2010, when BTG Pactual took the top spot and Itau came in second. This year, BTG has fallen to seventh place over this period, according to Dealogic data. Itau also leads the tables in fees for 2011, earning $82m, or 13.3% of the pool. It beat out JPMorgan, with $62m (10.1%), and BTG with $61m (10.0%). Out of a global ECM volume of $620.9bn (down 31%), LatAm’s total of $30.96bn pales in comparison to the $188.7bn seen in the US, the $155.1bn in EMEA and the $188.3bn in Asia Pacific ex-Japan.
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Telmex to Delist from NYSE, NASDAQ and Latibex
Telmex has decided to delist its ADRs from the New York Stock Exchange and the Nasdaq stock market and its L shares from Spain’s Latibex market, in a reorganization that follows Telmex’s acquisition by America Movil. The telecom company’s shareholders approved the move, and it now plans to inform the various stock markets of its decision to pull the listing, which also involves terminating the ADR program in the US. Telmex shares, however, will continue to trade in the Bolsa Mexicana de Valores. With the Telmex acquisition by AMX, Mexican billionaire Carlos Slim has sought to unify his telecom assets under a single roof.
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UK PE Enters Brazil with Cable Buy
Private equity firm 3i has spent BRL100m ($54m) to acquire a minority stake in cable TV and broadband company Blue Interactive Group, marking the private equity firm’s first foray into Brazil. Officials at Blue Interactive declined to discuss the actual stake to be acquired, the valuation of the transaction or the advisors, if any, involved in the deal. A 3i spokesman says that 3i’s stake “is significant but still a minority holding.” Blue Interactive registered revenues of more than BRL100m in 2010 and will register a similar figure again in 2011, the company says. Blue Interactive was created in 2009 and since then it has led an acquisition campaign hoping to achieve scale and growth in the cable TV and broadband business. 3i estimates that the cable TV and broadband markets in Brazil grew 19% and 34% respectively during the 2005 through 2010 period. The spokesman notes that 3i has analyzed more than 200 companies since opening its doors in Brazil on April 1, and plans to make two Brazilian investments a year, focusing on the consumer sector that caters to the country’s growing middle class.
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Wamex Retaps CCDs
Wamex has reopened its certificado de capital de desarrollo for MXP667m ($48m), according to the Bolsa. The 2019 CCD was originally sold in November 2009 for MXP750m. At the time, it failed to reach its MXP1bn targeted size, but the borrower was expected to return to market to make up the difference. Proceeds from the transaction created a private equity fund that invests in Mexican companies or projects. Buyers of the instruments receive 100% of their original investment, plus an additional 12.5% preferred return. After that, investors will get 80% of additional proceeds, with Wamex keeping the rest. ING managed the reopening.
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EM Equity Suffers Outflows
EM equity funds hemorrhaged $2.2bn during the week ended December 14, according to EPFR, including $280m from LatAm funds. In terms of performance, EM equity, fell 3.92% during the week ending December 15, and is down 21.77% on the year, according to Lipper. Similarly, LatAm funds lost 2.99% on the week, and have dipped 22.71% ytd. Global small and mid-cap funds tumbled 3.2% on the week, and have slipped 15.46% ytd.
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Essal Pulls Plug on Equity Sale
Corporacion de Fomento de la Produccion (Corfo) pulled the plug on an $80m-$90m offering of shares in water utility Essal after the sale process failed to clear a minimum floor price. The government financial entity is looking to sell 40% of Essal to get its position down to 5%, and had been planning to place 387.7m secondary shares at CLP90-CLP100 per share. It was to be repeat, though at a smaller size, of what Corfo did earlier in the year with its positions in Aguas Andinas, Essbio and Esval, under a broad government plan to sell assets to cover reconstruction costs from the 2010 earthquake. It is not known if Corfo might seek an M&A transaction for the stake, a move it was heard considering before electing a follow-on sale. Banchile, Bank of America Merrill Lynch and IMTrust were managing.