Brasil Travel Turismo e Participacoes has launched an IPO that could reach BRL1.21bn ($683m), setting a February 8 pricing date. The holdco formed in March 2011 for 35 companies involved in travel-related businesses plans to sell 170,000 primary shares and 466,500 secondary shares at BRL1,250-BRL1,650 each, according to regulatory documents. This would indicate a BRL1.21bn total size if priced at the top of the range, or BRL915m at the low end, assuming the use of a 15% greenshoe. The secondary shares are being sold by the founders’ holding vehicle, which is owned by ex-BTG Pactual partner Pedro 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 deal is expected to leave Brasil Travel with a 40% free float. The issuer comprises companies spread throughout Brazil, which together posted BRL137m in Ebitda in 2010, and is headed by Paulo Castello Branco, a former VP of Brazilian airline TAM, and chaired by Guimaraes. Barclays, Credit Suisse, Flow Corretora and Santander are managing the sale. The deal sneaks ahead of a BRL1.44bn IPO from oil services provider Seabras, which had announced Monday a February 9 pricing. Fellow travel services provider CVC is also expected with an IPO in the first part of 2012. Outside of Brazil, Bancolombia’s $885m-equivalent follow-on is scheduled to close this week, and Peru’s Cementos Pacasmayo will debut its ADRs February 7, raising up to $300m.
Category: Equity
Seabras to Offer First Test of Brazil IPO Appetite
Seabras Servicos de Petroleo will soon test new issue demand in the LatAm equity markets after launching an up to BRL1.44bn ($823m) IPO that, if successful, could mark the region’s first such transaction this year. The deal will also be a litmus test for an oil sector that had mixed results last year. The Brazilian unit of Norway’s Seadrill has set February 9 to price the sale of 48m primary shares, setting a range of BRL20.00-BRL26.00. This would indicate a BRL1.44bn deal at the top of the range, or a BRL1.1bn sale at the bottom, assuming a 15% greenshoe is used in each case. A 20% hot issue is also available. “In the short-term we have seen some momentum, and some positive movement in the Bovespa. Some of the stronger companies that have been on standby may now give it a try, but it will not be easy,” says a Rio-based portfolio manager. The oil sector saw Perenco and Karoon cancel IPOs last year, and the troubles at Petrobras supplier Lupatech aren’t welcome news, but investors say success should come down to price. “There is demand for this type of deal; it just depends on price. The oil industry deals that were cancelled last year were mostly due to price,” says a Sao Paulo-based equity investor. He adds that Seabras may be aided by having a US-listed parent, providing a possible reference for valuations. The owner of 3 drillships with long-term Petrobras contracts was spun off last year and is raising funds for acquisitions and other investments as it looks to cover a wider range of oil field services in Brazil. It generated BRL524.7m in Ebitda in the first 3 quarters of 2011, up from BRL371.2m in the corresponding period in 2010. It is also negotiating a 50-50 joint investment with pipe-laying support vessel operator and fellow Petrobras contractor SapuraCrest. BTG, Morgan Stanley, Banco do Brasil and HSBC are managing the transaction. Brazil Travel was also heard preparing to launch its IPO as soon as this week. Brazil’s Bovespa is up 9.9% so far this year, a
LatAm Equity Books Light Inflows
EM equity funds brought in $1.92bn for the week ending January 18, while LatAm funds finally began to make a positive contribution to the total by booking $50m in inflows, according to EPFR. Performance continued to be strong, with LatAm funds up 3.56% for the week ended January 19 and up 10.35% for the year, according to Lipper. EM funds gained 3.67% on the week and 7.69% on the year. That compares to a 2.53% weekly jump among global small and mid-cap funds, which have climbed 6.27% on the year.
Pacasmayo Sets NY Target
Peru’s Cementos Pacasmayo is heard aiming for February 7 to hold its New York follow-on, and plans to price the debut of its ADRs at $11.50-$13.00. The sale of 20m ADRs, representing 100m common shares, would raise $282m at the $12.25 midpoint, assuming a 3m share greenshoe is exercised. The offer is seen as essentially being an IPO for the cement company, as its Lima shares are relatively illiquid. The shares closed Friday at PES5.90 ($2.19). Pacasmayo is raising funds for the expansion of its La Rioja plant and also for the development of a phosphate and brine project. JPMorgan and Santander are managing the transaction. The deal is looking to be the first large equity offering of the year in LatAm. Others that are close to seeing the light of day include an IPO of Mexico’s Alpek, which could also happen in February, and IPOs from Brazilians Brazil Travel and Seabras, each expected to launch as soon as this week.
Peru Miner to List in Lima
Dia Bras Exploration, a Toronto-listed Peruvian miner, has applied to list its shares on the Lima stock exchange. The precious and base metals miner with operations in Peru and Mexico expects approval by next month. It does not indicate whether such an operation would involve the raising of new funds.
Peruvian Port Operator Postpones IPO
LatAm will have to wait a bit longer to start this year’s IPO calendar, after Peru’s Andino Investment Holding (AIH) postponed a $50m-$60m-equivalent sale that had been scheduled for Thursday. The port and logistics operator says it will announce a new pricing date “in the next few days.” AIH is looking to sell 15m-30m shares and had established a PES4.70 floor. With the shares expected to price around PES5.00-PES5.10, PES153m ($57m) sale was expected. Proceeds would be used to reduce debt and for expansion projects. BCP is managing the sale. Andino borrowed $85m from Goldman Sachs last year to purchase fellow port operators Neptunia and Agencia Maritima.
Private Equity Sees LatAm Opportunities
The private equity space in LatAm continues to evolve, offering a range of advantages over what the asset class faces in other areas of the world. This includes the improving profile of managers, more creative structures and the possibility of buying controlling stakes in businesses, said investors Thursday at the LatinFinance Investors & Markets Forum. The bulk of the business remains in Brazil, but competition among private equity players there is fierce. That said, some find ways to address it such as bringing in competitors as partners and targeting smaller deals, notes Julio Marquez, a managing director for Global Emerging Markets, an alternative investment fund. And the Brazilian deals are gradually becoming pricier. “We see deals at 7, 8 or 9x Ebitda, up from 5 to 6x Ebitda a few years ago,” points out Chris Bruneau, executive director for asset manager 57 Stars. “But prices are still rational.” Exit multiples tend to be the same as the ones paid for entry so investors rely more on Ebitda growth, they note. The deals themselves are becoming more creative with the use of earnouts and other approaches. Private equity players tend to look for the right managers for the companies they buy and in this sense Brazil offers a strong foreign-educated generation of executives versus peers in other markets of the world, Bruneau says. Indeed for Bruneau, another important aspect of investing in LatAm comes from the ability of P/E players to buy majority stakes in the companies. In China and India many entrepreneurs are young and want to enjoy the business upside so they are less likely to surrender control, but owners of many longstanding family-run businesses in Latin American are more willing to do so. Peter J. Von Lehe, a managing director at Neuberger Berman Alternatives, says he tends to like plays on Brazil’s growing middle class, such as companies in the consumer and health industries. However, he stays away from companies with local currency revenues and dollar b
Tenaris Ups Confab Offer Price
Global Steelmaker Tenaris has increased a previous offer to buy all the shares it doesn’t already own in its Brazilian Confab unit by 13%, to BRL5.85 ($2.92) per share. The price is up from a BRL5.20 offer made in August, and indicates a BRL440m ($247m) purchase if holders of all 75.2m outstanding minority shares accept. Shareholders rejected the earlier offer. Some Confab minority shareholders have already agreed to the price, Tenaris says. If successful, Tenaris plans to delist Confab from the Sao Paulo stock exchange.
Pacasmayo Eyes February Listing
Peru’s Cementos Pacasmayo is likely to price a New York equity follow-on in February, according to people following the deal, though a firm date still remains to be set. The Hochschild Group-controlled cement maker is seen looking to raise about $250m in its US debut, to fund the expansion of its La Rioja plant and also develop a phosphate and brine project. JPMorgan and Santander are managing the deal. Fellow Peruvian Andino Investment Holdings is scheduled to price a $50m-$60m local-only IPO tomorrow.
Vapores Completes First Phase of Equity Offer
Chilean shipping and ports operator Compania Sudamericana de Vapores has raised $659m in the first stage of a share subscription closed Tuesday. The funds are part of a $1.2bn capital increase approved last year to turn Vapores’ fortunes around amid a difficult global shipping environment. Following the close of the period open only to existing holders, the next phase of the offer, open to the public, is set to run today through Tuesday. Vapores is offering 5.87bn new shares in the transaction, at $0.2045-equivalent each. CSAV is controlled by Quinenco, the investment arm of the Luksic group. The plan also includes the spinoff of the company’s port and logistics unit, Sudamericana Agencias Aereas y Maritimas.