Seabras Servicos de Petroleo, a Brazilian unit of Norway’s Seadrill, has filed with local regulators to issue an IPO. The owner of 3 drillships with long-term Petrobras contracts plans an all-primary share sale to raise funds for expansion. In its initial documents, it does not indicate size or timing of the sale, to be led by BTG Pactual. The Brazilian assets, spun off into a separate unit in July, generated BRL524.7m in Ebitda in the first 3 quarters of 2011, up from BRL371.2m in the corresponding period in 2010. Proceeds from the IPO are expected to go toward acquisitions and other investments as Seabras looks to over a wider range of oil field services in Brazil. A 50-50 joint investment with pipe-laying support vessel operator and fellow Petrobras contractor SapuraCrest is being negotiated, the Olso and New York-listed parent says.
Category: Equity
Brazil Oil IPO Withdrawn
PetroReconcavo, a Brazilian E&P company with onshore wells in the state of Bahia, has put off plans for an IPO, according to the CVM. The issuers’ registration, filed in May, has been withdrawn. It had planned to sell both primary and secondary shares, but had not given details as to the size. US-based E&P operation PetroSantander owns 50% of PetroReconcavo, with another 25% held by Brazilian E&P company Perbras, a founder along with PetroSantander, and 25% by a PE fund owned by Brazil’s Banco Opportunity. Reconcavo was looking for funds to spend in new auctions for oil field concessions as well as possible acquisitions. BTG Pactual and Credit Suisse had been hired to manage the sale. Brazilians – in oil or any other sector – have been unable to IPO since July, and many who had entered the queue this year have dropped out. If better market conditions return, many are expected to re-file.
Vale Set for Fertilizer Delist
Vale has acquired almost 100% of the outstanding shares in Vale Fertilizantes, spending BRL2.078bn ($1.41bn) in a public buyback offer and preparing the way for the eventual delisting of its fertilizer unit. Vale acquired 211,014, or 83.8%, common shares in Vale Fertilizantes, and 82.9m, or 94.0%, preferred shares in the unit, paying a previously announced price of BRL25.00 each. Vale now holds, through its Mineracao Naque vehicle, 99.99% of the total common shares and 98.09% of the total preferred shares of Vale Fertilizantes. Morgan Stanley managed the process. The Brazilian miner plans to group the Vale Fertilizantes assets with other related businesses that it can then re-IPO in 2012.
Vapores Sets Capital Raise Price
Chilean shipping and ports company Compania Sudamericana de Vapores has set a $0.2045 per share price for its planned $1.2bn capital increase. Vapores is preparing to issue 5.87bn new shares, indicating a 10% discount from the average price of the stock on December 7. The preferential stage of the capital increase is scheduled to begin on December 19 and will end on January 17. Controller Quinenco, the vehicle for the Luksic family, is contributing $1bn to help turn around the struggling shipper.
Brazil Pharma Readies Share Split
Brazil Pharma is preparing a one-for-two share spilt, and will put the matter to a shareholder vote December 23. The BTG Pactual-controlled retail pharmaceutical operator raised BRL465.75m ($293m) in June, in one of the last IPOs in Brazil this year.
LatAm Gains Help Offset EM Equity Outflows
LatAm equity funds booked inflows of $48m in the week ended December 7, according to EPFR. This helped offset losses in other regions which contributed to $159m of outflows for EM equity funds during that period. In terms of performance, EM equity, fell 2.37% during the week ending December 8, and is down 18.45% on the year, according to Lipper. Similarly, LatAm funds lost 1.49% on the week, and have dipped 20.06% ytd. Global small and mid-cap funds were up 1.79% on the week, but are down 12.70% ytd.
Brazilian Travel Co Plans IPO
Brazilian travel operator Brasil Travel Turismo e Participacoes has filed with local regulators to carry out an IPO. Brasil Travel is a holdco for 35 companies involved in businesses such as travel agencies, foreign exchange, travel insurance, and tour operations. The company is headed by Paulo Castello Branco, a former VP of Brazilian airline TAM, and chaired by co-founder and ex-BTG Pactual partner Pedro Guimaraes. It has not yet indicated the number of primary and secondary shares to be sold, but it is expected to target a size of about BRL500m ($275m). The secondary shares are to be sold by the founders’ vehicle, owned by Guimaraes, the Sette family and Jose Marcilio Nunes. Brasil Travel plans to use the primary proceeds to grow in Brazil and in other countries in LatAm, with about 85% of the funds to be spent on acquisitions. The issuer was formed in March and comprises companies spread throughout Brazil, which together posted BRL137m in Ebitda in 2010. Barclays, Credit Suisse and Flow Corretora are managing the sale. No Brazilian company has issued an IPO since July, and investors are skeptical that such deals can happen before April 2012. Market conditions still need to improve and a few large follow-ons should first test appetite early next year before any IPO issuance can take place, they say. Fellow tourism operator CVC is also among the many Brazilians preparing an IPO.
Brazil Investors Negative on 2012 Equity Prospects
Brazilian investors paint a poor picture about the prospects of any immediate improvements in the equity markets in 2012 as broader international problems weigh on secondary performance. “There is an expectation for a strengthening in the second quarter of 2012. It has turned from a negative perspective to a positive one. But that doesn’t make a difference when you are trading on European headlines,” says Joao Carlos Scandiuzzi, chief strategist at BTG Pactual Asset Management, which has BRL85bn ($47bn) of equity assets under management. While bankers are optimistic some new deals will get done, many investors are skeptical. “The investor community is more conservative when we analyze new issues, so I think it is going to be another tough year in the equity markets,” says Pedro Sales, equity portfolio manager at Credit Suisse Hedging Griffo. “It’s not a question of China, Europe or the US, it is just that the new issuers have not been performing well.” His shop, which has $30bn equivalent under management, including asset management and private banking, has been focused on picking companies that have been trading down, including Helbor in real estate, Itau in banking, and Ultrapar in the fuel distribution space. “Stock picking in Brazil is extremely important. It’s not that easy to find good investments. You have to dig,” he adds. Would-be new issuers should pay attention to investors’ desire for size and liquidity, he says. “There are a lot of companies waiting to issue. Some of them are large and some of them are small, but most lack the quality that we saw in the beginning of the cycle in 2006. When you combine the power that the buyside now has with the quality of the pipeline, probably you will begin to see a more fair value with lower pricing,” says Alexandre Silveiro, portfolio manager at Quest Investimentos.
Contour Global Pulls Colombia IPO
Another 2011 LatAm IPO has failed Wednesday when ContourGlobal LatAm’s COP273bn ($143m) sale failed to get a minimum demand. This move comes as surprise as it was thought the Colombia market was relatively well insulated against broader global shocks. The unit of US-based energy investment company ContourGlobal had planned to sell 27.6m shares, or about 28% of itself, at COP9,900 each, in a sale period that closed Monday. Colombian regulations allow the issuer to set a minimum, which if not reached allows a cancellation of the sale. Bancolombia and Corredores Asociados were managing the sale, intended to raise funds for new projects. The company’s main operating assets include a stake in the Termopaipa and Termoemcali power plants in Colombia, as well as a wind farm and two hydroelectric projects in Brazil.
Santander Chile Pops after Well-Bid FO
Santander Chile Shares rose nearly 10% in their first session following a well-bid $949m follow-on, reflecting the transaction’s 2x-plus demand. It sold 14.74bn shares, represented by 14.19m ADS, at CLP33.00, or $66.88 per ADS, to bring in a total of CLP486.47bn ($949m). The price was slightly higher at $66.58 at Tuesday’s close, and the shares rose 9.45% Wednesday to $72.87. The deal saw $2.01bn in competitive demand from 2,041 accounts, Santander Chile says. Foreign ADS buyers accounted for 65.02% of the offer, with local pensions and institutions getting 20.00%, foreign institutions buying local shares getting 7.94%, local retail investors 3.52% and retail ADR buyers 3.52%. In all, about 70% of the buyers were international, which bankers say is much higher than their the one third foreign participation normally seen in Chilean deals. Analysts initially expressed skepticism about the strength of demand, but bankers say a 7.4% drop in share price between the deal’s announcement and Tuesday may have lured buyers who always considered the bank a quality asset. Santander’s decision to extend the lockup period to 1 year, also helped, bankers say. The deal, sold through the Teatinos Siglo XXI Inversiones vehicle, represents 7.8% of the Chilean unit, which now has a 33% free float, up from 25%. Santander, Bank of America Merrill Lynch and Credit Suisse managed the international portion, while Santander and LarrainVial handled Chilean orders. The sale was somewhat overshadowed by the announcement late Tuesday of Santander’s complete pullout from Colombia, another part of the plan to cover a EUR6.47bn ($10.08bn) capital shortfall to meet new capital requirements imposed by European regulators. The bank has said it will retain earnings and sell assets in order to raise its core capital ratio to 10% from about 8% by June. It is also seeking to sell up to 8.2% of the Brazil unit, which could bring in as much as $2bn. The next sale in Chile’s market is the government selldown