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.
Category: Equity
Posted inDaily Brief
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.
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Petrominerales Plans Bogota Listing
Colombia’s Petrominerales has received approval to list its shares on the Bogota stock exchange. The oil producer is already listed in Toronto, and does not plan to raise new funds in association with the listing. It is doing so to offer better access to Colombian investors. Petrominerales shares closed Tuesday at CAD31.94 ($33.84).
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Uruguay Farm Developer Pulls IPO
Uruguay’s Union Agriculture Group postponed a $200m-plus IPO scheduled to price Tuesday night, according to bankers on the deal, with more news about the timing expected today. If the deal is sidelined, it will become the latest in a string of LatAm issues that have been pulled and follows a jettisoned effort last week from Brazilian sugar cooperative Copersucar. Union had been aiming to sell 14.3m shares at $13-$15, plus a possible 15% greenshoe, and become the first IPO from Uruguay since 2006. Union, which acquires underutilized farmland in Uruguay and develops it for resale, was seeking funds for land acquisitions, and possibly for debt repayment and working capital. Credit Suisse and JPMorgan were the leads.
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ABC Din Rumored Canceling Offering
Chilean investment bank LarrainVial confirms it is working on the preliminary stages of an IPO for retailer ABC Din, but declines to confirm talk that the company has decided to halt the deal. This comes in the in the wake of local market volatility caused by the recent implosion of fellow retailer La Polar under allegations of unauthorized practices in the management of its credit portfolio. ABC was reported to have been considering a sale of 25% of the company.
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Ecopetrol Sets Follow-on Price
Ecopetrol, the Colombian oil company, is looking to raise up to COP2.5trn ($1.4bn) after setting pricing for its follow-on at COP3,700 per share ($2.09). The company has set a date of between July 27 and August 17 for the transaction, which will consist of at least 675.7m shares, representing 1.67% of the company. The government has authorized the sale of up to 9.9% of the company. Credit Suisse, JPMorgan and Bancolombia are expected to manage the sale after being mandated as bookrunners on Ecopetrol’s previous transaction. Ecopetrol’s shares closed at COP3,770 on Monday, up from Friday’s closing level of COP3,705.
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LatAm Equities See More Outflows
LatAm equity funds saw $241m in outflows for the week ending July 20, according to EPFR Global. EM equity funds, meanwhile, had $1.1bn in outflows for the week. However, performance was positive. EM funds climbed 1.46% for the week ending July 21, though they remain down 0.01% ytd, according to Lipper. LatAm funds also rose 1.79% for the week, but remain negative 4.22% ytd. Global small and mid-cap funds also jumped 2.01% for the week, and are up 4.87% ytd.
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Parque Arauco Sets Share Price
Chilean commercial property developer Parque Arauco has set a price of CLP950 per share for a 90m share sale, which would raise CLP85.5bn ($185.2m). Proceeds will help fund Parque Arauco’s expansion in Chile, Colombia and Peru. Arauco’s shares closed at CLP993 Friday.
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Los Grobo Pulls Brazil IPO Plan
Argentine grower Grupo Los Grobo is postponing the plan to spin off some of its Brazilian businesses in an IPO, according to bankers managing the sale. This comes after market conditions and weak demand forced the cancellation of fellow agricultural sector IPO Copersucar. The spinoff was to combine Los Grobo’s agricultural services businesses, the agricultural property acquisition and development activities of Sollus Capital, of which LG would own 100%, and the sugar and ethanol business of Companhia Mineira de Acucar e Alcool (CMAA), of which LG would own 69%. The principal owners are founding Grobocopatel family and Vinci Partners-backed investment company Sollus Capital. Bradesco, BTG Pactual, Credit Suisse and Itau were hired to manage the sale.