Spanish infrastructure company Isolux Corsan has filed for an IPO for its Brazil-based Isolux Infrastructure unit. Isolux Infrastructure operates road concessions, transmission lines and solar energy plants in Brazil, India, Italy, Spain, the US, Mexico and Peru, and transferred its headquarters to Sao Paulo last year to focus on EM expansion. Proceeds from the primary share-only sale would go towards investments in transmission and road concessions, and also for working capital and repaying debt. Isolux does not state the size or timing of the transaction, noting only that Credit Suisse and Santander have been picked to manage. It has been active in Brazil since 2000. The country accounts for 50% of the EUR7.5bn ($10.8bn) of projects the company is developing worldwide. Isolux infrastructure brought in BRL595m of Ebitda for the full year 2010, with 43% coming from Brazil. It also plans to expand in the region, specifically in Chile and Colombia.
Category: Equity
BTG Takes Small Step toward IPO
BTG Pactual has filed to become an open company in Brazil, a move considered to be the first step in the IPO process. However, the Brazilian investment bank notes that the registry “does not indicate that an IPO is imminent.” CEO Andre Esteves told LatinFinance in February that the bank saw an IPO in the next 1-2 years. The firm had reportedly been considering a float last year, but it instead went to the private market. In December, it issued $1.8bn in new shares to a consortium including Asian and Middle East sovereign wealth funds.
EM Equities See More Outflows
LatAm equity funds saw $256m in net outflows for the week ending August 17, according to fund data firm EPFR Global, as investors continued to flee risk assets against a backdrop of losses in markets around the globe. EM equity funds, meanwhile, saw $2.8bn leave the asset class for the week. EM equity funds fell 1.19% for the week ending August 18, and are down 13.41% ytd, according to Lipper. LatAm funds managed a gain of 0.59% for the week, but are down 16.05% ytd.
Equity Strategies on Track despite Selloff
Global equity losses continued to send funds scurrying for liquidity last week, but investors still point to solid fundamentals in LatAm that the growing crisis hasn’t yet damaged. Pessimism, however, has spilled over into the region’s bolsas. Brazil’s Bovespa, for instance, fell 1.3% Friday, registering a 1.9% loss for the week and a 24.3% dip year-to-date. As happened in 2009, this has left some investors on the hunt for buying opportunities. “If you have a sufficiently long time horizon, it is a good time to think about buying. The fundamentals haven’t shifted much. What is playing out is that the hunt for liquidity is not favorable to EM, and it is caught up in the selloff,” says Chris Palmer, EM equity fund manager at Henderson Gartmore in London. He notes that Brazil, in particular could show the similar type of rebound it did following the 2008-2009 crisis, as growth rates should still remain strong and support corporate earnings. “The recent selloff, as painful as it might have been, didn’t touch key sensitive nerves that could have resulted in far more devastating macro consequences for the region,” UBS says in a report. The new issuance pipeline for the region is another matter, having all but dried up during the last few weeks. Bankers are optimistic that some of the larger and more consumer-focused deals could get done in Q4. However, a lack of filings – only Brazil’s CVC has registered for a new deal this month, with several pulling filings – means a difficult lag time.
Ecopetrol Seen Crossing Finish Line
Ecopetrol is expected to successfully raise the COP2.5trn (1.4bn) it is targeting in its domestic equity follow-on, according to local brokers and analysts. The Colombian state-owned oil company closed books Wednesday after setting a COP3,700 per share price at launch on July 27. Global market turmoil during the sale period had raised concerns that demand for the 675.7m shares might not be enough to reach the target, particularly when Ecopetrol share price dropped below the offering price August 4. Government indications that it may sell additional shares as soon as next year may also have hurt demand. “The sale should be oversubscribed, though not by very much,” says a Bogota-based stock analyst following the sale, and estimating a COP2.5trn-COP3.0trn final book. As the sale was aimed at retail investors, the company has many small orders to tabulate. An Ecopetrol spokesman declined to comment on the demand, noting an indication should come from the company by Tuesday of next week. Local press had cited a radio interview with Ecopetrol’s president Tuesday saying books had passed COP2.0trn, and would comfortably pass COP2.5trn. Shares had resurfaced above the offer price earlier this week, but shed 3.0% Wednesday to close at COP3,595. Ecopetrol is down 10.0% on the year and 4.6% since the beginning of the offer period. Credit Suisse, JPMorgan and Bancolombia led the sale, placed through a group of local brokerages. The government has the ability to add shares to the sale if it chooses. The 675.5m shares represent 1.67% of Ecopetrol. The government is authorized to sell up to 9.9%, and has indicated it may look to begin offering additional pieces of this amount next year.
BTG Sets Panamericano Tag-along
BTG Pactual plans to hold a tag-along offer for outstanding shares of Banco Panamericano September 16, to complete the takeover of the troubled lender. The bank bought Silvio Santos’ stake in troubled mid-tier Brazilian lender Panamericano in January for BRL450m, and BTG Pactual is now offering minority investors BRL4.89 per share for the 63m shares outstanding, meaning a BRL309m spend if 100% accept. This is the same price it paid Santos, and represents a 56.05% stake in the bank, or essentially the portion that is not owned by BTG or Caixapar, the investment arm of state-owned bank Caixa Economica Federal. Panamericano shares closed Wednesday at BRL5.68. BTG bought Silvio Santos’ 37.94% stake in Panamericano in January after the lender was bailed out after accounting discrepancies were found on its books.
Perenco Cancels IPO Shelf
Brazil’s Perenco e Gas do Brasil Participacoes officially has revoked its IPO registration after pulling a planned deal in July. The Brazilian unit of UK-based oil exploration company Perenco, which cited market conditions for the decision not to move forward, had planned to sell 0.4m primary shares at BRL1,550-BRL2,000, meaning a deal of perhaps BRL830m ($530m). Perenco, which operates in 16 countries worldwide, had planned to use the funds to develop its 5 blocks in the Espirito Santo Basin and acquire additional blocks. About a third of the raise was slated for acquisitions, including new government auctions. BTG, Itau and Morgan Stanley were leads. The deal was among several Brazilian sales pulled in June and July as equity markets tanked. The new issuance pipeline has been slow to rebuild, with no new launches and only travel company CVC filing for a transaction.
Davivienda’s Sights on Foreign Stock, Bond
Colombia’s Banco Davivienda plans to raise up to $350m in subordinated bonds overseas, and also continues to work on plans for a foreign stock listing. The mortgage lender, which has designs on expanding into Peru, Chile, and Central America, would be taking advantage of low rates in what would be a debut international issue. The sale would not come for at least a few months and possibly not until next year, with the process of choosing banks not yet started, says an official at the bank. A 7-year tenor is being considered, with subordinated bonds best fitting the bank’s capital needs, he says. Davivienda also reiterated it plans on an eventual ADR listing. There are no details regarding the timing of this process, though it is also thought to be a 2012 event, and may or may not involve the sale of new shares. The lender had indicated in the past it wished to sell bonds and shares abroad, but plans were put on hold during the 2008 credit crisis. Davivienda raised $228m equivalent in a domestic market IPO last year, and is a frequent issuer in the local bond market. The bank is expected to have a COP300bn-COP500bn bond sale within the next month, after postponing it last week.
Citi Names Brazil Originations Head
Citi banker Mariano Gaut has been named head of Brazil capital markets origination at the US bank. The move comes as Citi tries to make its mark in the region’s largest economy after recently hiring Andre Kok as managing director and head of global banking for Brazil. Gaut comes from Citi in the US where he was head of the bank’s equity-linked business. He will move to Sao Paulo in his new role and will work alongside the Brazil global bank team led by Kok. Gaut will report to John Chirico and Richard Zogheb, co-heads of CMO. Meanwhile, in New York, Chris Gilfond and Mario Espinosa will continue to co-head LatAm DCM, while Richard Blackett and Juan Carlos George will do the same for LatAm ECM. Both New York teams will continue to direct strategy across LatAm, including Brazil.
Itau Builds Equity Team
Khalil Adam has become the latest person to join Itau’s equity team as the Brazilian bank continues to expand its footprint across LatAm. Adam comes to Itau from Santander and will be part of a four person equity sales team in New York. He replaces Marcelo Spinelli who recently left Itau to go to BTG Pactual, and will start work on August 29 after finishing gardening leave. The Brazilian bank brought in Ricardo Cavanagh earlier this year in Argentina where he is mandated to build up the bank’s Southern Cone efforts. Cavanagh reports to Carlos Constantini , global head of research, who in turn reports to Chris Egan, head of equity and exchange-traded derivatives. Barbara Angerstein has also been brought on-board from local Chilean shop Celfin and will head Itau’s equity efforts in that country. The bank is now looking to hire equity experts in Peru and Colombia as well.