Banco do Brasil is preparing to launch its tag-along offer to buy additional shares in Argentina’s Banco Patagonia. Between September 1 to September 28, the bank is offering holders $0.98 per share – based on a $1.31 price minus a $0.33 dividend payment – for the 38.4% it does not own. This would mean a $271m purchase with full acceptance, though it will almost certainly be less, as shareholders representing 10.6% committed to retain their stake at the time of the sale last year. Banco Patagonia shares closed Friday at ARP5.03 ($1.20). Banco do Brasil bought 51% of Banco Patagonia for $479.7m, or $1.31 per share, in April 2010.
Category: Equity
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Citi, Itau, Lead Bond, Equity Rankings
Citi is leading the regional DCM league tables as August nears its close, heading into what is traditionally the busiest month of the year for new issuance. The US bank booked $9.35bn in volume from 42 transactions year to August 26, according to Dealogic. HSBC comes in second with $8.50bn from 57 deals. Total volume is up this year, at $91.95bn from 224 transactions. That compares to $77.21bn from 166 deals in the same period in 2010. Citi finds itself in third place in terms of fees, at $26m, behind JPMorgan ($29m) and Credit Suisse ($27m). It also tops the loans tables, with $1.92bn from 10 deals, ahead of BBVA’s $1.85bn from 9 transactions. On the equity side, Itau leads the table with $3.16bn in volume from 24 deals, beating fellow Brazilian BTG Pactual’s $2.06bn from 12. The pair also lead the fee ranking for equity, with Itau booking $78m and BTG $60m.
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Equity Funds Continue to Shrink
LatAm equity funds saw $1.76bn in net outflows for the week ending August 24, according to fund data firm EPFR Global. EM equity funds also continue to shrink, with $11.57bn leaving the asset class for the week. Brazil accounted for $853m of outflows and Mexico $35m. EM equity funds lost 1.44% for the week ending August 25, and are down 14.63% ytd, according to Lipper. LatAm funds shed 0.62% for the same period, and are down 16.42% ytd. This contrasts to global small and mid cap funds, which gained 0.22% but have lost 11.91% ytd.
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Colombian Bank Readies Shares
Banco de Occidente is preparing to sell COP200bn ($112m) in shares in Colombia’s local market following the approval of its prospectus Wednesday. The beginning of the sale period should be announced within the next two weeks. The bank plans to sell 6.06m shares at COP33,000 each, as it looks to raise funds to increase its capital base. Existing shareholders have first rights on the offer. The bank’s own brokerage and Deceval are managing the sale.
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Ecopetrol Sale Falls Short
Ecopetrol got COP2.40trn ($1.34bn) in demand for its equity follow-on during the order period that closed last week, falling just short of its COP2.5trn target. The state-controlled oil producer launched the deal July 27, announcing it would sell 675.7m shares at COP3,700 each. Since then, global equity markets have taken a turn for the worse, with the share price dipping below the COP3,700 level. The overhang from future Ecopetrol sales – the government aims to sell up to 9.9% of the company in pieces beginning next year – also may have hurt. Still local analysts and brokers had expected Ecopetrol to squeak by. Orders came in from 228,000 accounts, owing to heavy marketing efforts focused on Colombia retail investors. Credit Suisse, JPMorgan and Bancolombia managed the sale.
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Spanish Infrastructure Unit Plans Brazil IPO
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.
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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.
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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.
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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.
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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.