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.
Category: Equity
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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.
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AMX Moves to Buy Remaining Telmex Shares
As the last step in an effort to get all of the Mexican billionaire Carlos Slim’s telecom operations under one roof, America Movil (AMX) plans to make a public offer for the 40.04% shares of Telmex it doesn’t own, spending up to MXP76.34bn ($6.51bn). AMX will offer MXP10.50 per share for the approximately 7.2m shares, representing what it says is an 11.1% premium over the average share price of the last 30 days, or a 2.7% premium to Monday’s MXP10.22 close. If successful, AMX would own all of the Telmex shares and de-list its former parent. The operation, which still must be approved by regulators, would complete the consolidation of Slim’s telecommunications holdings. Last year, America Movil acquired Telmex Internacional and Telmex holding company Carso Global Telecom, giving it about 60% of Telmex, in an operation involving stock and cash worth about $23bn.
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Minerva Unveils Warrant Repurchase
Following the raising of BRL190m in convertible debentures last week, Minerva has moved on to the planned repurchase of BRL153m ($98m) notional value in stock warrants, setting an August 31 date for the operation. The Brazilian meatpacker will offer holders BRL0.65 each for the 29.2m warrants still outstanding, spending as much as BRL19m. The warrants were issued in 2009, as part of a $159m stock offering, and give holders the right to buy shares at BRL5.24 before they expire in September. Minerva says it is extending the offer to avoid holders experiencing an “excessive dilution.” Link Investimentos is managing the process.
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CCPF Completes Financing Round
Colombia Clean Power & Fuels (CCPF), a coal mining company operating in Colombia, has completed its Series A Convertible Preferred financing round with a total of $29.3m in subscriptions. The company received cash proceeds of $22m while $7.3m in debt was converted into Series A preferred shares. The company intends to use the proceeds to acquire additional coal concessions in Colombia.
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EM Bond Inflows Keep Coming
EM bond funds took in $924m for the week ending July 27, according to EPFR Global. According to Lipper, EM debt funds rose by 0.52% for the week ending July 28, and are up 6.34% ytd. Meanwhile, global income funds climbed 0.45% for the week, to reach 4.90% growth ytd. International income funds inched 0.62% higher, bringing the ytd return to 6.31%.
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LatAm Equities Fall
LatAm equity funds saw $98m in inflows for the week ending July 27, according to EPFR Global. EM equity funds, meanwhile, had $275m in inflows for the week. EM funds fell 0.36% for the week ending July 28, and are down 0.37% ytd, according to Lipper. LatAm funds also slipped 2.26% for the week, and remain negative 6.31% ytd. Global small and mid-cap funds also dipped 2.32% for the week, but remain up 2.41% ytd.
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GrupoSura’s Share Sale Seen Easing Ratings Pressure
Colombia’s Grupo de Inversiones Suramericana (GrupoSura) is targeting October for an up to $2.1bn equity follow-on to partially fund the recent acquisition of ING’s LatAm assets and to help it avoid any potential downgrade that could result from the purchase, say bankers. On Wednesday, the company’s bond dipped about a point after S&P put its BBB minus rating on negative watch. The agency said that incremental indebtedness from the transaction could hurt the company’s credit profile and that it would wait to see how GrupoSura planned to pay for the acquisition before acting further. “They don’t want to lose their investment-grade rating and they will do whatever they have to do to avoid getting a downgrade,” says a DCM banker familiar with the company. The conglomerate had in June approved the sale of up to 130m new shares, and now plans to raise $1.4bn-equivalent in the local markets and another $700m abroad. Banks could be named as soon as next week, according to an investor relations official. GrupoSura agreed this week to acquire the ING assets for EUR2.68bn ($3.9bn), consisting of EUR65m in assumed debt and EUR2.615bn in cash. It is putting up $500m in cash and can also tap credit lines it has with a pool of 6 international and 3 domestic banks. Bankers, however, think that the company will avoid leaning too much on bank debt in an effort to placate rating agencies. “They have a lot of financing options and they will go for whatever hits leverage ratios less and doesn’t compromise their ratings. Shorter-term bank financing will put a lot of pressure on their ratings,” the DCM banker says. The company official declines to disclose the group of banks or the terms on the credit facilities. GrupoSura also says it intends to combine the pension funds it bought this week with ones it owns already, placing them in a listed holding company at some point in the next few years. In addition to the assets purchased from ING, GrupoSura owns minority positions in Colombian c
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Minerva Set for Convert Pricing
Brazilian meatpacker Minerva is expected to announce today the price for the sale of BRL300m ($190m) in 2015 convertible debentures following the closing of bookbuilding Tuesday. The company is looking at a reoffer price of between 97.00-103.00 of face value, with the interest rate and conversion price range already established. In what is being called the Brazilian market’s first-ever public sale of mandatorily convertible debentures, Minerva will pay interest at 100% of DI, with the minimum and maximum conversion prices set at BRL6.00 and BRL8.00, respectively. The issuer elected to price the bonds at the premium or discounts, as regulators only wanted investors bidding on one value during the sales process. The company’s shares closed at BRL5.69 Monday. Proceeds are marked for the repayment of existing debt, and for working capital. Minerva is rated.BBB minus on a national scale. Goldman Sachs, Deutsche Bank and Banco do Brasil are leads. Separately, following the convertible bond, Minerva plans to launch a tender for some BRL150m notional value in stock warrants issued as part of a 2009 capital raise.