Colombia’s Grupo Exito has started the sale period for its COP2.502trn ($1.40bn) equity follow-on, which will close September 23 and see allocations finished by the September 27. The retailer is offering 114.27m shares at COP21,900 each, which it says represents an 8% discount to the COP23,800 average price over the month to the announcement of the deal. The company’s shares closed at COP23,000 Tuesday. Majority shareholder Grupo Casino intends to subscribe in line with its rights, leaving 45% of the deal, or COP1.126trn worth of shares available to the public. Exito had indicated it would seek to raise $1.4bn in equity to help fund the June acquisition of Grupo Casino’s Disco, Devoto y Geant supermarket businesses in Uruguay for $746m. Casino holds a 62.5% in Disco and Geant, and a 96.5% stake in Devoto. Credit Suisse, JPMorgan, Citi and Santander are managing the international sale, with Corredores Asociados leading the domestic portion.
Category: Equity
Vapores Asks Controllers for Debt, Equity
Chilean shipper Compania Sudamericana de Vapores is seeking a$350m in credit lines and $1.2bn in new equity from its shareholders. The move comes after price deterioration and escalating costs led to a $525m loss in the first half of the year. It plans to sign credit lines of $250m and $100m with from majority shareholders Quinenco and Maritima de Inversiones. Also, it will seek $1.2bn through an equity rights offering. The move comes after a similar $500m equity raise completed in July. Vapores also plans to seek a strategic partner for its container shipping business and will split its freight shipping business from the vessels and cargo maritime services managed by the Sudamericana Agencias Aereas y Maritimas unit.
Lojas Americanas Gets BNDES Cash
Brazilian retailer Lojas Americanas has agreed to sell BRL293m ($178m) in 2017 convertible debentures to government development bank BNDES. The bonds to be purchased by the BNDESPar unit pay a fixed rate of 13.15%, and are convertible at a BRL19.25 per share price at any time. Americanas has also taken out a BRL442m credit line with BNDES. The retailer plans to use the new funds for its organic expansion plan.
Pharmacy Moves toward Bovespa
Brazilian pharmacy chain Pague Menos has registered to become a public company, marking the first step in the IPO process. The northeast Brazil-based drug store had been among those tipped to IPO this year. It is looking to raise funds for expansion in a sector that is growing along with the rising purchasing power of the middle class. There is no timetable for the sale yet, with a company official saying that it is best to wait until market conditions improve and international investor appetite return. Barclays, Banco do Brasil, Credit Suisse and Itau have been hired to manage the process, the official says. As the company wants to list on the Novo Mercado, the float will be at least 25%, though the exact size remains to be determined. In August, the Brazilian drug retail sector saw mergers announced that would create the top two companies in the space – Drogasil with Droga Raia, and Drogaria Sao Paulo with Drogaria Pacheco.
Mexico Bankers Hope for CCD Revival
Mexican are hopeful that this autumn will see a revival in the market for certificados de capital de desarollo (CCDs), instruments created to allow pension funds to make private equity investments through a publicly traded instrument. So far this year, volumes stand at MXP4.47bn ($363m) from 3 transactions, still shy of the 4 deals worth MXP11.27bn seen last year. Bankers are largely rejecting the notion that the sluggishness in the public IPO market is dampening CCD issuance as well. Public market volatility has little impact on instruments that are long-term investments and have no real secondary value, they argue. “The Afores are open [to buying CCDs] because there is no direct valuation because it is a fund,” says a Mexican equity banker. Still the last CCD issue occurred back in April and since then deals have not emerged from the pipeline as new regulations allowing CCDs to fund via capital calls meant issuers had to go back to the drawing board to decide how to proceed. Prior to this, deals were entirely funded upfront, but capital calls allow for funding over time. “Issuers who have been waiting, are now back on the ground figuring out how to move forward,” says an official at a Mexico City private equity shop that has issued a CCD. He notes the investor base for this asset class should broader over time, and that there is a growing interest from other buyers such as insurance companies. CCDs shouldn’t suffer from risk aversion in the way the IPO market does, but Afores have shown little interest in these instruments, perhaps because they are focusing on buying cheap stocks in the secondary markets, says a Mexico City-based ECM banker awaiting to issue a CCD. Several issuers are still in the pipeline, including Mexico Retail Properties, Darby Overseas, Prudential Real Estate Mexico, Finsa and a retap from Atlas Discovery Capital.
Exito Sets Terms for $1.4bn FO
Colombia’s Grupo Exito has set the terms for a COP2.502trn ($1.40bn) equity follow-on, which is expected to launch in the next few weeks. The retailer is offering 114.27m shares at COP21,900 each, which it says represents an 8% discount to the COP23,800 average price over the last month Against Wednesday’s COP23,460 close, the discount comes at 6.6%. Exito notes that majority shareholder Grupo Casino intends to subscribe in line with its rights, leaving 45% of the deal, or COP1.126trn, available to the public. The issuer will open the sale period upon receiving regulatory approval, which could happen in a matter of days. Exito had indicated it would seek to raise $1.4bn in equity to help fund the June acquisition of Grupo Casino’s Disco, Devoto y Geant supermarket businesses in Uruguay for $746m. Casino holds a 62.5% in Disco and Geant, and a 96.5% stake in Devoto. Credit Suisse and JPMorgan are managing the international sale, with Corredores Asociados leading the domestic issue. Bankers are optimistic the 8% discount can help the deal mitigate any market volatility ahead. Ecopetrol’s follow-on sale last month was hurt by sagging secondary levels, and raised COP2.4trn rather than the COP2.5trn it had targeted.
Coming to a Standstill
New issuance prospects in August appeared as dim as they had at any time since the 2008-2009 financial crisis. With markets shedding value across the globe, investors started to question […]
Uncertain Times
Investment bankers focused on Latin America may have had a profitable year so far, but the last quarter looks less than promising against an increasingly rocky backdrop. Optimism in the […]
Banks Suggest Lower Price for UOL Offer
Advisors to Brazil’s Folhapar should offer minority shareholders of its Universo Online (UOL) unit BRL16.83 per share, below the BRL17.00 limit it had set. Folhapar, publisher of the Folha de Sao Paulo newspaper, is attempting to buy up 18.4m ordinary and 30.7m preferred shares, or 41% of the capital, it doesn’t own in order to de-list UOL. At BRL16.83, Folhapar would be looking at spending BRL826m if all holders accept. Bradesco provided the valuation. UOL does not give the timing for the completion of the process.
Chiloe Sees Oct-Nov IPO
Cultivos Marinos Chiloe, seen as among the next issuers to IPO in Chile, is aiming for an October or November offering depending on market conditions. The salmon producer has been looking to do the transaction before the September 18 Chilean Independence holiday. “We are looking at the market to see when will be the right time to do it, but it is a question of weeks rather than months,” CEO Ricardo Purcell tells LatinFinance. The issuer has not set a size, but Purcell says it should be a 33% float. The company plans to use the proceeds to help finance its $170m investment plan. Builder Ingevec is another Chilean debutant at the front of the list, with the market awaiting a rescheduling of the IPO that was to have taken place in August. Celfin is managing the Chiloe sale, while Larrain Vial has the Ingevec mandate.