Category: Equity

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.

Private education company Abril Educacao became the latest LatAm IPO to price below range in what has been a difficult summer for new issuance. The spinoff of publisher Grupo Abril priced a BRL427.8m ($272.5m) IPO at BRL20 per share, an 8% discount to the bottom of its BRL21.75-BRL26.75 range. Abril Educacao priced 18.56m primary shares and a 15% greenshoe consisting of secondary units sold by members of the controlling Civita family and private equity funds managed by BR Investimentos and Banif. “It’s one of the best deals out there,” says a participating New York-based equity investor. “They’re in a sweet spot in the education sector. They’re the best one positioned in the K-12 sector. They have a pretty good management.” However, equity investors who opted out of the deal say that there are already plenty of buying opportunities among listed companies thanks to the decline in the Bovespa. Accounts also cited the recent difficulties among LatAm IPOs, including the cancellation of Copersucar’s IPO Tuesday, as reasons not to invest. The book was heard 1.5x oversubscribed, with much of the interest coming from large local pension funds. A unit consists of one ordinary share and two preferred shares. Abril Educacao, part of the media conglomerate Grupo Abril, plans to use 63% of the proceeds for acquisitions, 27% for paying off debt, and 10% for opening new schools and improving existing ones. The issuer claims it would be the first listed education company in Brazil with a focus on basic and pre-college education. Listed education specialists Kroton, Anhanguera and Estacio have all tapped the equity markets recently to fuel rapid growth in one of the country’s hottest sectors, but the three focus more on the college and continuing education segments. Abril also specializes in book publishing, technical education, and preparation for public sector exams. It also plans to enter the fields of language education and distance learning. It booked Ebitda of BRL102.5m in 201

Rough market conditions have forced Brazil’s Copersucar to postpone a potential BRL1.5bn ($940m) IPO, according to those following the transaction, as it struggled to get demand even after lowering the price. Originally out with a BRL14.50-BRL18.50 range that would have resulted in one of the biggest IPOs of the year, the sugar and ethanol cooperative had lowered its target to BRL12.00 Monday, and was heard looking to put together a deal at BRL10.00 Tuesday afternoon. “It was too high of a price they were asking, and the overall market environment certainly didn’t help,” says an analyst at a Sao Paulo-based asset manager who was following the deal. The market had seen a valuation of about 16x 2011 Ebitda at the BRL14.50 level, compared to about 7x for peer Cosan. Almost all Brazilian IPOs this year have priced below, at or near the bottom or their range. LatAm’s agricultural equity issuers have had an exceptionally rough time, with farmland developer AdecoAgro resetting its range in January and BrasilAgro pulling a planned follow-on in May. The 48-member Copersucar was seeking funds to shore up its capital structure ahead of planned investments, including BRL200m to upgrade facilities at the Santos port. BAML, Credit Suisse, Goldman Sachs and Itau were handling the 86.5m primary share and 21.6m secondary share sale, representing as much as a 26% float. Copersucar handles sales, marketing, storage, distribution and other services for its member group of independent Brazilian sugar and ethanol producers, as well as non-exclusively for another 50 non-members, in the states of Sao Paulo, Parana, Goais and Minas Gerais. With LatAm bond issuers having an encouraging day Tuesday, it remains to be seen how the tricky environment affects Uruguay’s Union Agriculture, scheduled to raise about $230m July 26. In Brazil, Abril Educacao, aiming to IPO Thursday, was heard faring better, with demand more than half covered.

Brazil’s Copersucar has lowered price guidance on its IPO scheduled to price today, and is now aiming for a total size of about BRL1.49bn ($944m). The issuer is heard getting a solid anchor order at BRL12.00, and is now planning to build the book there, ducking under its original BRL14.50-BRL18.50 range. It had been aiming for more than BRL2.0bn. The sugar and ethanol cooperative is offering 86.5 primary and 21.6m secondary shares, meaning a BRL1.49bn total sale if done at the new price and a 15% greenshoe is included. A 20% hot issue is also available. “This is not an attractive proposition at those levels,” a Sao Paulo-based analyst says of Copersucar. He estimates a valuation of 16x 2011 Ebitda at the bottom of the original 14.50 range, compared to 7x for larger listed competitor Cosan, and notes he would see the valuations becoming more attractive at around BRL10.00.This year has been particularly cruel to companies attempting IPOs, and the past weeks have been challenging for would-be issuers of all types. The Bovespa lost 1.1% Monday, after shedding 3.4% last week. The 48-member group is seeking funds to shore up its capital structure ahead of planned investments, including BRL200m to upgrade its Santos port. The company would have about a 26% float after the sale, assuming the greenshoe is added. BAML, Credit Suisse, Goldman Sachs and Itau are leads. Copersucar handles sales, marketing, storage, distribution and other services for its member group of independent Brazilian sugar and ethanol producers, as well as non-exclusively for another 50 non-members, in the states of Sao Paulo, Parana, Goais and Minas Gerais.