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.
Category: Equity
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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.
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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.
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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
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SMU Advances IPO
Chilean retail holdco SMU has filed for an IPO, according to a banker managing the deal, aiming to price as soon as October. The portion of the company to be floated and the exact size and timing has not been determined, but the retailer is thought to be offering 18%, which could raise more than $200m equivalent. Celfin and Santander have been hired to manage the sale. SMU, which is owned by local businessman Alvaro Saieh, controls supermarket chain Unimarc, along with home improvement and convenience store chains.
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Agrosuper Advances IPO
Chilean food products company Agrosuper has registered to sell 15% of itself through an IPO. The issuer is raising funds for a $350m expansion plan that aims to boost exports. It does not yet give firm details as to the size or timing of the operation, to be led by Banchile and LarrainVial. Controlled by businessman Gonzalo Vial, Agrosuper specializes in ham, poultry and salmon, and has operations in Italy, China, Japan, Mexico and South Africa. The equity sale does not affect a $400m-equivalent local bond sale, which is also planned for the second half of this year.
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LatAm Equities Return to Outflows
LatAm equity funds saw $390m in outflows for the week ending August 3, according to EPFR Global. EM equity funds, meanwhile, saw $1.2bn leave the asset class for the week as global equity markets crashed. Mexico equity funds lost $175m in their worst week since late December as investors penciled in reduced US demand for Mexico’s exports. Meanwhile, Brazil saw $80m in outflows. EM equity funds fell 7.2% for the week ending August 4, and are down 7.7% ytd, according to Lipper. LatAm funds also plunged 9.24% for the week, for a whopping 14.69% decline ytd. Global small and mid-cap funds also collapsed to the tune of 8.73% for the week, falling 6.33% ytd.
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Chilean Builder Readies IPO Show
Chile’s Ingevec will begin taking orders Monday for a $30m equivalent IPO, with pricing set for August 23. Raising funds for an expansion plan, the construction and engineering company plans to list 260m shares, plus 10m in stock options to executives, or 28.9% of the company. It is looking to spend $130m through 2014 to bring sales to $450m from $250m this year. LarrainVial is managing the sale. The transaction comes as the region’s bankers and buyers have been expressing skepticism about equity deals getting done in the remainder of 2011, with Brazilian issuers and a Uruguayan pulling in recent weeks. Ecopetrol is looking to carry out a follow-on this month in Colombia, however, and Chilean issuers have seen 10 public deals this year.
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Brazilian Equity Woes Temporary: Citi’s Press
Bovespa has lost 16% on the year through Tuesday and many companies’ new issuance plans have been scrapped, but there are still reasons to be constructive about Brazil’s equity outlook, says Citi LatAm strategist Jason Press. He says that the Bovespa has only seen a 12% peak-to-trough drop and Citi reckons from current levels the market will provide 25% returns by year’s end. The US bank has a preference for companies tied to interest-rate sensitive sectors that have suffered but should recover once Brazilian government policies become clearer and worries about the US and Europe subside. These include banks, low-income homebuilders, and certain consumer names, including AmBev. Press called the recent postponed transactions in Brazil a “temporary problem.” New issuance should follow a pickup in the equity market. “In Latin America, there has been an average of $7bn-$8bn in new equity issuance per quarter during the last 18 months, and we see no reason to suspect the market would slow from that,” he says. Press spoke on a panel and on the sidelines of a Brazilian-American Chamber of Commerce event Tuesday in New York.
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EI Exits Gafisa
Equity International (EI) has sold its last remaining stake in Brazilian homebuilder Gafisa, completing a series of share sales that began in 2007. The US investment vehicle founded by Gary Garrabrant and billionaire Sam Zell sold the final 2.7% portion over the course of this year. A spokeswoman says the selldown was done through small separate transactions and no values were disclosed. The 2.7% stake – which is the equivalent of about 11.7m shares, according to Economitica – would be worth about BRL84m ($54m). EI made its first investment in Gafisa in 2005. It still has positions in 5 Brazilian companies, including BR Malls.