Chilean equity issuers should find it as difficult as the rest of the region to issue before the end of the year. Parque Arauco took advantage of a calm window to raise $168m-equivalent through a follow-on, but this does not necessarily indicate that more will follow, bankers say. “It will be very difficult to see more issuance. The issuer came through a window that opened in a challenging environment,” says a local ECM banker. The shopping center developer and operator sold 90m shares, with the controlling shareholders purchasing $60m-equivalent. Parque Arauco plans to use the funds for its $840m expansion plan. LarainVial and Banchile led. Looking ahead, the government could bring the offering of shares in water utility Essal before the end of the year. Food producers Agrosuper and CM Chiloe are awaiting better conditions for IPOs, as are builder Ingevec and retailer SMU.
Category: Equity
Pacific Rubiales Tempts Convert Holders
Pacific Rubiales is giving holders of its 2014 8.0% convertible bonds the chance to convert to equity early with an additional premium. The Toronto-based Colombian oil producer is offering accepting holders all of the shares due under the current conversion rate of 77.94 shares per CAD1,000 face value, plus additional shares with a value equal to CAD200. The price for the additional shares is to be set as the average price from October 27-November 4. The offer is open from November 9-29. Pacific Rubiales says it is undertaking the offer “to bring maximum balance sheet flexibility” so that it can pursue and execute its acquisition strategy. RBC is managing.
SK Advances Equity Increase
Shareholders of Chilean conglomerate Sigdo Koppers (SK) have given the gree light for a $370m capital increase, according to a company official. The move comes after SK paid EUR550m ($790m) for Belgian portfolio company Magotteaux. That purchase is initially being funded with an 18-month bridge loan from advisor BNP Paribas. The group has been shedding non-core assets in order to be more acquisitive in the mining sector. SK shares closed at CLP821.97 Tuesday.
Essal Close to Sale Decision
Chile’s Essal water utility is close to making a decision about a possible M&A deal or an IPO, perhaps as soon as the next 3-4 weeks, a person familiar with the matter says. Options include a public offering of shares or a block sale to strategic partners, as government entity Corporacion de Fomento de la Produccion (Corfo) looks to reduce its 45% position to about 5%. Timing of a public transaction would depend on market conditions improving. A sale would follow the pattern set in public share offerings this year from fellow water utilities Essbio and Esval. In July, Corfo raised CLP260.64trn ($564m) from the sale of all but 5% of each of the pair, as part of a plan to help with budgetary needs created by last year’s earthquake. That transaction followed an $879m exit from Aguas Andinas. Aguas Andinas owns 54% of Essal. Banchile, Bank of America Merril Lynch and IMTrust, the same trio that managed Aguas, Essbio and Esval, are working with Essal.
Slim Plans to Delist Cicsa
Carlos Slim’s Grupo Carso holdco plans to buy up the 32.82% of its Carso Infraestructura y Construccion (Cicsa) construction company. Carso is offering MXP8.20 per share, representing a 16.8% premium to Monday’s MXP7.02 closing price. This would cost Carso MXP6.94bn if the entire 32.82%, representing 846.4m shares, is repurchased. If the 95% threshold is reached, Carso would delist Cicsa.
Ecuadorean Dairy Plans IPO
Holding Tonicorp, an Ecuadorean dairy producer, is preparing an IPO to raise $74m-$87m, according to a broker managing the transaction. In what appears to be the country’s first IPO in at least five years, Tonicorp plans to float 30%-35% of itself, or 12.4m-14.4m shares, at an offering price of $6.00 each. The IPO is set to open on Wednesday. While bankers have been forecasting that borrowers are unlikely to come with more IPOs this year, they may have overlooked how small markets like Ecuador’s remain somewhat insulated from the broader turmoil abroad. Local brokerage Inmovalor Casa de Valores is managing. Tonicorp, controlled by the Alarcon family, owns Industrias Lacteas Toni, and also Plasticos Ecuatorianos and Dipor, which produce, package and distribute Toni’s dairy products. Combined sales from the 3 companies are forecasted at $274m next year, up from a projected $252m this year, and are expected to reach $380m by 2016.
LatAm Equity Funds Lose Cash
EM equity funds had inflows of $667m in the week ended October 19, though LatAm equity funds dragged them down, with outflows of $188m, according to EPFR. EM funds lost 2.01% of their value during the week ending October 20 according to Lipper, for a 19.87% loss ytd. Similarly, LatAm funds lost 1.98% for a ytd loss of 21.80%. Global small and mid-cap funds lost 1.14%, and are down 12.96% ytd.
Davivienda Launches FO
Colombia’s Banco Davivienda has opened the subscription period for a domestic equity follow-on, as it seeks to raise COP480bn-COP800bn ($253m-$422m). The mortgage specialist-turned-broader lender plans to sell 24m-40m shares, at a price of COP20,000 each, through November 10 with allocation by November 25. The bank is raising funds to grow and keep up with the expansion of other Colombian FIGs. It has its eyes on operations in other countries including Peru, and an eventual ADR listing and 144a bond offering. Corredores Associados is managing the follow-on. The bank is the latest Colombian blue-chip to hold a follow-on targeting domestic retail investors in a market somewhat insulated from global equity turmoil. Retailer Almacenes Exito hit its COP2.502trn follow-on target last month, and Empresa de Energia de Bogota is set to close a COP700bn follow-on next week. Ecopetrol’s deal hit a rough patch in July, but still raised COP2.4trn out of a COP2.5trn target. Davivienda raised $228m equivalent in an IPO last year.
Arcos Raises $1bn In FO Despite Weak Markets
Arcos Dorados managed to generate decent demand for a $976.8m equity follow-on Wednesday despite what was a down day in most equity markets. The LatAm McDonald’s operator sold 44.4m shares, assuming exercise of a 10% greenshoe, at $22.00 each, representing a 2.82% discount to Wednesday’s $22.64 closing price. The transaction was heard to be between 2-3x subscribed, and saw participation from over 200 accounts, 25% of which were new investors to the company. The deal builds on Arcos’ $1.25bn April IPO, which was the region’s only IPO to top its range this year. The sale represents the exit of private equity investors DLJ, Capital International and Gavea, which bought McDonald’s LatAm operations along with Arcos controller Woods Staton in 2007. Bankers on the deal note the exit was part of the investors’ plan, and should now help the shares by eliminating the overhang associated with their eventual exit. Bank of America Merrill Lynch, Credit Suisse, Citi, Itau, JPMorgan and Morgan Stanley were leads. With the end of the year fast approaching, it is difficult to see additional follow-ons for 2011, even from well-known quality issuers, ECM bankers say. The region’s large IPO pipeline is looking at January or later, they add.
Dantas Vehicle to Up Vale Position
Eletron, a Brazilian investment vehicle controlled by financier Daniel Dantas, is set to take an additional 3% in Valepar, the parent of Vale. A Brazilian court has ruled that Eletron’s purchase of 37.5m shares for BRL632m can proceed. It was opposed by fellow Valepar holder Bradespar, which is appealing the decision, as the price level is below market price. Eletron holds less than 1% in Valepar, a holding company with a 52.7% voting stake in Vale.