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.
Category: Equity
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.
BNDES Ups JBS Stake
Brazil’s BNDES has completed a BRL3.48bn ($2.18bn) transaction to turn JBS bonds into equity, upping the development bank’s stake to 30% from 17%. The bank’s BNDESPar arm bought the bonds in 2009 and indicated in May it would convert them. The deal does not alter the controlling structure of the company, JBS says.
Nutresa Seeks Further Acquisitions
Colombian food company Nutresa is now fully capitalized for this year after its recent COP522.5bn ($299m) equity follow-on, but could come to the markets again once it finds other acquisition targets, the company’s CFO Ana Maria Giraldo tells LatinFinance. Giraldo points out that with a net-debt-to-Ebitda ratio of just 1x, Nutresa’s leverage is still low. “We have low debt levels and this allows us to look at acquisitions,” she says. The company is looking to spend anywhere between $500m-$600m on its next target and the recent share issue has helped prepare the ground for any potential purchases. Target countries and regions are Peru, Central America, the Caribbean and the US, and Nutresa is now focusing its efforts on the cold cut sector after having bought US biscuit maker Lil’ Dutch Maid in 2010 and ice-cream company Helados Bon in the Dominican Republic this year. Depending on the size of the acquisition, the company may try its luck with a level 3 ADR, Giraldo says. Though Giraldo doesn’t discount international bond issues, she says there are more cost effective sources in the local markets and through bi-lateral loans with domestic banks which are still liquid. “Banks are offering very competitive financing,” she adds. Raising capital in other LatAm bond markets is also a possibility. Indeed, Nutresa was one of the first companies to tap this type of funding source when in 2009 it placed $40m equivalent of 10-year notes among Peruvian institutional investors, paying Libor+1.80%. It also raised local financing in Costa Rica after buying Galletas Pozuelo in 2006, and took out an $85m bi-lateral loan with US boutique Stephens when it acquired Lil’ Dutch Maid.
Corporates Rev Up Share Buybacks as Markets Sag
Brazilian airline Gol and developer Cyrela have become the latest Brazilian companies to take advantage of the recent slide in equity prices and announce share repurchases Gol is looking at a 1-year plan to buy up to 10% of its outstanding shares, while Cyrela also expressed its intention to repurchase shares. Gol’s shares closed Friday at BRL10.18, and are down 59.1% on the year against an 18.4% drop in the Bovespa over the same period. Cyrela’s stock closed at BRL13.83 and is off 35.4% this year. Also filing plans this week are Direcional Engenheria, which is looking at a 5.6% repurchase, Telefonica’s Telesp, which wants to buy up to 10%and developer MRV, which is eyeing a purchase of up to 3.2% of its outstanding shares.
Investors Continue to Bolt from EM Equities
LatAm equity funds saw $692m in net outflows for the week ending August 10, 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 $7.7bn leave the asset class for the week. Mexico equity funds lost $95m, and Brazil saw $109m in outflows. EM equity funds fell 5.1% for the week ending August 11, and are down 12.4% ytd, according to Lipper. LatAm funds also plunged 2.2% for the week, for a 16.9% decline ytd.
EEB Advances FO
Empresa de Energia de Bogota has approved plans for an equity follow-on of up to COP1trn ($551m). The timing and exact size remain to be determined, and given the difficulty issuers are having across the region, it is not expected to launch soon. Corredores Associados is advising the utility, according to a person with knowledge of the matter, and is expected to be a lead manager along with other banks. EEB plans to use the proceeds from the offering to fund its expansion plans. Shares closed Wednesday at COP1,435.
Ingevec to Hold off on IPO
Chilean construction and engineering company Ingevec has postponed its IPO, which had been scheduled for August 23. The sale of 29% of Ingevec, on the road since the beginning of the month, will wait “until the volatility currently seen in domestic and international markets stabilizes,” the company says. The issuer is looking for about $30m–equivalent to fund expansion projects. LarrainVial had been managing the sale.
Carlyle Plans Travel Agent Selldown
The Carlyle Group plans to float a portion of travel services provider CVC Brasil Operadora e Agencia de Viagens, according to a prospectus announcing an all-secondary share IPO. CVC, 63% controlled by the US private equity group, had been expected to be among this year’s Bovespa debutants, though the success of deals sitting in the Brazilian pipeline has been made less clear due to recent volatility. As it is just the initial filing, CVC does not yet indicate the size or timing of the deal, to be led by BAML, BTG Pactual, Itau, JPMorgan and Morgan Stanley. It recorded BRL120m in Ebitda in 1H2011, up from BRL116m in the corresponding period of 2010, and booked BRL269m for the full year 2010. CVC was founded in 1972, with Carlyle entering in 2009. The Bovespa has suffered as much as any of the world’s falling equity indexes in the past few days, adding to bankers’ expectations of reduced volume. It will be particularly challenging for IPOs and for small and mid cap offerings, bankers say. The possibilities for follow-ons and for larger-cap offerings, are somewhat better, though most of the rumored and filed names in Brazil are on the smaller end of the continuum. In Colombia, large-cap Ecopetrol’s COP2.5trn ($1.4bn) domestic-only sale suffered a snag when secondary levels dipped below the COP3,700 per share offering price Monday.
GrupoSura Mandates On FO
Colombia’s Grupo de Inversiones Suramericana (GrupoSura) has selected BBVA, Deutsche Bank, HSBC, JPMorgan, Santander and UBS to lead the international tranche of its up to $2.1bn equity follow-on offering, Andres Bernal Correa, the company’s vice president of investment and finance, tells LatinFinance. The same international institutions have provided $1.65bn in bridge loans which can be disbursed anytime over a 1-year period and will carry a tenor of 1-2 years. The move is part of a financing plan to cover the cost of the recently agreed EUR2.615bn ($3.76bn) acquisition of ING’s LatAm pension fund and insurance assets. The company is targeting a $700m size for the foreign follow-on and a larger $1.4bn-equivalent to be placed among locals via Bancolombia, which along with Banco de Bogota and Davivienda has also given GrupoSura up to $1bn in bridge financing. UBS and Bancolombia acted advisors to GrupoSura on the acquisition. Proceeds from the credit lines are slated only to fund the acquisition, but hopes are that the company will not have to tap the bridge, Bernal says. Equity financing is seen as way to the ease pressure being exerted by the ratings agencies like S&P, which placed the company’s BBB minus rating on creditwatch after noting that incremental indebtedness from the acquisition could impact GrupoSura’s credit profile. The FO is expected to be launched in October, but with bolsas across the region tumbling 5% or more Monday after S&P took away the US’s triple A credit rating over the weekend, questions remain about the ability of any company to tap equity markets, at least in the short-term. “We hope that markets will calm down in a few weeks…and that it will not affect (LatAm) as much as others,” Bernal adds. The amount of funding available to the company through various sources exceeds the amount required for the acquisition, notes Bernal, leaving some breathing space should other markets close. These include about $500m of cash on hand. Ideally, the c