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
Category: Equity
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.
Copersucar Pulls IPO
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.
Ecopetrol Sale Seen at $1.1bn-$1.7bn
Colombia’s Ecopetrol will seek to place COP2.0 trn-COP3.0trn ($1.14bn-$1.71bn) in an equity follow on, according to remarks made by its CEO and confirmed by a company spokesman. This amount is an estimation based on the state-controlled oil producer’s needs, the spokesman says, with exact details decided at a board meeting Friday. The issuer has scheduled a July 27-August 17 order period for the local-only sale, and must state the exact number of shares and the share price on prior to the July 27 opening. A COP2 trn-COP3trn deal would represent between 1.5% and 2% of Ecopetrol, despite the government’s authorization to float up to 9.9%. Credit Suisse, JPMorgan and Bancolombia are expected to manage the sale after being mandated as bookrunners on Ecopetrol’s previous transaction. Shares closed at COP3,710 Tuesday.
Copersucar IPO Lowers Pricing amid Turbulence
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.
Advent Sells Remaining Stake in Cetip
Global private equity firm Advent International agreed to sell its remaining 10% stake in Brazilian private asset clearinghouse Cetip for approximately $512m to IntercontinentalExchange (ICE). ICE will acquire 31.6m shares of Cetip common stock for BRL25.50 per common share, including 6.4m shares held or controlled by Brazilian bank Itau. The transaction will make ICE the largest shareholder in Cetip. The transaction consideration includes $302m from ICE’s cash on hand and $210m drawn from ICE’s existing revolving credit facilities. Advent had taken a 32% stake in the company in 2009, prior to its IPO in October of that year. Cetip generated BRL557m in revenues in 2010 and BRL376m in Ebitda. Goldman Sachs and Broadhaven Capital Partners advised ICE on the transaction.
Chile Grabs $564m from Water Equity Sale
The Chilean government’s Corporacion de Fomento de la Produccion (Corfo) has raised CLP260.64trn ($564m) from the sale of nearly all of its positions in water utilities Essbio and Essval. In a public follow-on, Corfo sold 3.655trn shares of Esval at CLP0.03 each and 10.17bn Essbio shares at CLP15.18 each, matching the floor prices set earlier last week. It offloaded 24.4% of Esval and 38.4% of Essbio, as the Chilean government proceeds with an asset sale plan to help with budgetary needs created by last year’s earthquake. Last month, for instance, the government sold $879m of Aguas Andinas. Corfo is set to keep a 5.0% position in each of Esval and Essbio, both of which are controlled by the Ontario Teachers’ Pension Plan. Banchile, BAML and IM Trust managed the transaction, the same trio that handled Aguas Andinas. The offering also gives much more liquidity to each company – previously Essbio had a 5.4% free float and Esval less than 1%. Esval shares closed Friday at CLP0.03 Friday and Essbio at CLP15.18. Esval is the second-largest water utility in Chile, and Essbio the third-largest, both providing service in the central part of the country.
LatAm Equity Sees Outflows
LatAm equity funds saw $128m in outflows for the week ending July 13, according to EPFR Global. EM equity funds, meanwhile, had $878m in inflows for the week. Performance was negative, with EM funds falling 2.94% for the week ending July 14 and 1.44% ytd, according to Lipper. LatAm funds also dropped 4.19% for the week, and remain negative 5.96% ytd. Global small and mid-cap funds also slipped 3.11% for the week, but remain up 2.90% ytd.
Nutresa Wraps Up FO
Colombia’s Nutresa has finalized the allocation for its COP522.5bn ($299m) equity follow-on, getting a total demand of COP9.21trn, or 17.6x. Final book size tops the food products company’s previous COP8.98trn estimate that had come at the end of its subscription period. Existing holders exercising their preferential rights claimed COP256.47 of the sale, going to 3,044 buyers. New investors accounted for COP266.03bn, from 20, 407 buyers, including COP186.22bn from the general public and COP79.81bn from institutions. Nutresa had set a COP20,900 per share price for the 25m shares at the beginning of the offering period. The issuer, formerly known as Grupo Nacional de Chocolates, is raising funds for expansion and to increase its liquidity. Bolsa y Renta managed the sale. Nutresa stock closed at COP21,700 Friday. The transaction is expected to be the last before a follow-on from state oil behemoth Ecopetrol. Investors are eagerly awaiting the announcement of the size and share price of the deal – expected to raise at least $800m equivalent – on or before the start of its sale period July 27.
Acon Buys Grupo Sala in Colombia
US PE firm Acon Investments has acquired an 81% stake in Grupo Sala from Spanish waste company Urbaser through its $250m Acon Latin America Opportunities fund (ALAOF) for an undisclosed amount. Sala has 650,000 municipal waste management customers throughout Colombia and turnover of approximately $80m, Acon partner Jose Miguel Knoell tells LatinFinance. Acon is also injecting additional capital to help grow Sala’s medical and industrial waste business unit, he says. Acon plans to build the business through organic growth and potential bolt-on acquisitions in both the domestic and adjacent markets, potentially including various Colombian water utilities. A sale to a strategic buyer is the most likely exit option for the firm as several pan-regional waste management firms in Brazil and Mexico are looking to grow. There is also potential interest from US and European specialized waste management companies. No advisors were retained on the deal. Approximately 40% of Acon’s $2bn in AUM is in LatAm.