Brazilian wireless operator TIM has launched an equity follow-on that could reach BRL1.96bn ($1.15bn), it says. The telecom plans to sell 190.8m shares, indicating a BRL1.96bn deal at Thursday’s BRL8.95 close and assuming the exercise of a 15% greenshoe. Pricing is scheduled for October 4. Parent Telecom Italia has said it will exercise its rights to 66.94% of the sale, in a move that backs up its denial last month of rumors suggesting it was considering selling down its stake in TIM to raise funds to help with troubles in its home market. The wireless operator is looking for funds to expand its infrastructure, being low on cash following the July BRL1.6bn purchase of broadband provider AES Atimus. Itau and Morgan Stanley are managing the sale.
Category: Equity
Ecopetrol Sits on Sidelines
Colombia’s Ecopetrol has no plans to issue additional equity or debt in either the international or local markets this year as the company has sufficient resources to fund capex and operations, CFO Adriana Echeverri tells LatinFinance. “Currently our [cash] position is $4.3bn and oil prices are way beyond our projected $65 dollars per barrel, so we are not requiring additional funding,” she says. The state-controlled oil producer has an $80bn capex plan for the 2011-2020 period, of which 65% will be funded with internal cash, 25% with debt and 10% equity, including funds raised in an equity follow-on last month. The recent follow-on fell short of its COP2.5trn target ($1.4bn), raising COP2.40trn, though the result has not altered the company’s plans. “The requirements for the company in local currency were COP2.5trn and the shortfall is not much so we are not thinking about additional equity,” Echeverri adds. The company has no timeline for its next round of equity sales, she says, noting the government still needs congressional approval to sell a 10% stake in Ecopetrol.
LatAm PE and VC Raising up in 2011
LatAm private equity (PE) and venture capital fundraising hit $4.9bn in the first half of 2011, up 59% from the corresponding period in 2010, making it likely to top last year’s $8.1bn full-year total, according to the Latin America Venture Capital Association (LAVCA). Brazilian funds have accounted for 67% of the total so far this year. The funds realized 65 investments in the first half, on par with 2010, though deal value was down 30% to $2.7bn from $3.8bn. The first half of 2011 also saw 33 PE-backed exits to the tune of $8.9bn. LAVCA says its recent survey of limited partners shows a growing interest in the region. It finds 90% of the investors in its limited partner survey are “either allocating to funds in Latin America or doing due diligence,” up from 82%. Some 55% indicated they expect to increase their allocations to fund managers investing in the region over the next 12 months, with 68% planning increases in the next 36 months.
Vapores Investors Consolidate Holdings
Chileans Grupo Luksic and Maritima de Inversiones (Marinsa) have agreed to consolidate their position in shipper Compania Sudamericana de Vapores (CSAV). The 15-year agreement includes all the shares of Liksic units Quinenco, Inmobiliaria Norte Verde and Inversiones Rio Bravo, and those of Marinsa, together representing 41% of the company. The holders will act as a block in shareholder and board meetings. CSAV has faced funding complications since price deterioration and escalating costs led to a $525m loss in the first half of the year. Last week, it said it would ask shareholders for a new $350m credit line and $1.2bn in new equity, after just completing a $500m equity raise in July. CSAV also plans to seek a strategic partner for its container shipping business and will spin off its freight shipping business from the vessels and cargo maritime services managed by the Sudamericana Agencias Aereas y Maritimas unit.
Brazilian Concessionaire Files to Go Public
Concessionaria Rodovias Tiete has filed with Brazilian regulators to become a public company in Brazil. The filing opens the door for it to IPO or a possible bond sale. Rodovias Tiete operates 406km of toll roads in Sao Paulo State. Company officials could not be reached for comment due to the Brazilian Independence holiday.
Exito Launches FO
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.
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.