Chile’s Corporacion de Fomento de la Produccion (Corfo) is scheduled to auction and price today shares in water utilities Essbio and Essval, a follow-on transaction that could raise as much as $1bn equivalent. Following the $979m sale last month of nearly all of its stake in water utility Aguas Andinas, the government entity is now ready to offload 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. Corfo plans to sell 3.65trn of Esval shares and 10.2bn of Essbio shares. With the respective floor prices set at CLP0.03 and CLP15.18, the total sale would raise a minimum CLP264.3bn ($571.3m). However, the relative illiquidity of the two companies’ shares – Essbio has a 5.4% free float and Esval less than 1% – makes estimating the final price and size difficult. In fact, bankers expect a deal under $1bn equivalent. Corfo is set to keep a 5.0% position in each company, both of which are controlled by the Ontario Teachers’ Pension Plan. Banchile, BAML and IM Trust are leads, the same trio that handled Aguas Andinas.
Category: Equity
Minerva, Launches Converts, Plans Warrant Tender
Brazilian meatpacker Minerva plans to sell its BRL300m ($190m) 2015 convertible debentures at between 97.00 and 103.00 of face value on July 26 and will tender for outstanding stock warrants thereafter. The deal is being called the Brazilian market’s first-ever public sale of mandatorily-convertible debentures, The issuer elected to price the bonds at the premium or discount, as regulators only wanted investors bidding on one value during the sale process, according to a company official. The issuer had originally planned to negotiate the interest rate, now set at 100% of DI, as well as the minimum and maximum conversion prices, now set at BRL6.00 and BRL8.00, respectively. Shares closed at BRL5.24 Wednesday. Proceeds from the sale are marked for repaying 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 sale Minerva says it plans to launch a tender for some BRL150m notional value in stock warrants issued as part of a 2009 capital raise.
Ecopetrol Preps for Share Sale Period
State-controlled Colombian oil company Ecopetrol is set to offer shares in its long-awaited equity follow-on beginning July 27. The details about the pricing and size of the local transaction are to be announced at or before the beginning of the order period, scheduled for July27-August 17. The biggest question is the size of the deal after the government changed its plans several times over the past year or so. The state-controlled oil company is able to sell up to 9.9%, though the expectation is for much less, perhaps as little as 1.0%. A 1% stake would still create a COP1.48trn ($838m) deal, at Wednesday’s COP3,650 close. Local bankers expect 2%-4%. Credit Suisse, JPMorgan and Bancolombia are expected to manage the sale after being mandated as bookrunners on Ecopetrol’s previous transaction.
Investors Put Cash in Unidas
Brazilian rental car provider Unidas has raised BRL300m ($188m) from existing and new shareholders in a private transaction. It sold the 134.8m new shares at BRL2.23 each. The participants included controller SAG of Portugal, as well as private equity funds Kinea Investimentos, Vinci Capital and Gavea Investimentos.
Mexican Bank Ready to Test IPO Market
BanRegio is scheduled to price its IPO today, aiming to raise close to $200m equivalent in Mexico’s second Bolsa debut this year. The Mexican bank, which focuses on lending to small and medium-sized businesses, plans to price 56.7m shares at MXP31.50-MXP40.00 each. This would mean a MXP2.33bn ($201m) transaction if done at the MXP35.75 midpoint and a 15% greenshoe is exercised. The base deal includes a secondary sale of 18.9m shares from controlling shareholders. “It has a strong asset base and operates in a market niche that’s growing very much,” says a Mexican investor looking at the deal. The transaction represents a 19.6% stake in BanRegio, which is raising funds to expand its operations in terms of size and geography. The bank plans to enter 8 more Mexican states, mainly in the center and south of the country. Banamex and BBVA Bancomer are managing the deal, half of which is expected to be sold to retail investors in Mexico and half to Mexican and international institutions. BanRegio had MXP53.5bn in total assets at year-end 2010, up 12.3% from 2009. Corporate loans constitute 80% of its MXP24bn loan portfolio, with a stated focus on small and medium-sized businesses. Founded in Monterrey in 1949 by Manuel Santos Gonzalez as Banco Regional del Norte, the lender is present in 13 Mexican states in the north and center of the country.
Repsol Sells YPF Block
Repsol has raised ARP351.3m ($86m) through a block sale of YPF shares in Argentina’s domestic market. The Spanish parent sold 1.99m shares in the Argentine oil and gas company at ARP177 each, representing a 7.8% discount to the previous ARP192 closing price. Shares closed at ARP183.00 Tuesday. BBVA Banco Frances and Raymond James Argentina managed the sale. The deal tacks on another 0.5% of YPF to the portion Repsol has been selling as part of a long-term plan to reduce its stake while keeping a majority. In May, Grupo Petersen agreed to exercise an option to buy 10% of YPF from Repsol for $1.3bn. That deal was the most recent in a string of transactions, including the $1.23bn secondary sale of YPF ADS in March that reduced Repsol’s position in YPF to about 58%.
Uruguay Farmland Play Launches IPO
Uruguay’s Union Agriculture Group has launched its US IPO, targeting more than $200m in a pricing expected July 26. Union, which acquires underutilized farmland in Uruguay and develops it for resale, plans to sell 14.3m shares at $13-$15, meaning a $230m sale if done at the midpoint and a 15% greenshoe is included. Union has set a cap of $287.5m on the size of the transaction. Proceeds are marked for land acquisitions, and possibly for debt repayment and working capital. Credit Suisse and JPMorgan are leads on the deal, which would result in a 31% free float if the greenshoe is exercised. Since its founding in 2008, Union has raised funds though private placements totaling $353.3m, and has acquired 84,670 hectares in Uruguay with an estimated worth of $270m. The company is trying its luck in what has been a tricky year for IPOs, particularly for agricultural companies. AdecoAgro, a similar play with assets in Brazil, Uruguay and Argentina, raised $314m in a January IPO, but only after resetting its range. Developer BrasilAgro pulled a planned follow-on in May. The last Uruguayan IPO was NZ Farming Systems’ $82m New Zealand-listed deal in 2006, according to Dealogic.
LatAm Equity Sees Slight Outflows
LatAm equity funds saw $6m in outflows for the week ending July 6, according to EPFR Global. EM equity funds, meanwhile, had $1.36bn in inflows for the week. For EM, this marks the first back-to-back weekly inflows since early May as retail investors committed fresh money for the first time in five weeks. Performance was also positive with EM funds climbing 1.93% for the week ending July 7 and 1.53% ytd, according to Lipper. LatAm funds also rose by 0.46% for the week, but continue to remain negative by 1.87% ytd. Global small and mid-cap funds also jumped 2.11% for the week, and are up 6.19% ytd.
Chile Continues Water Utility Selldown
Chile’s Corporacion de Fomento de la Produccion (Corfo) has begun investor presentations for the July 15 follow-on sale of shares in water utilities Essbio and Essval, which could raise around $1bn equivalent. Following its $979m sale last month of nearly all of its stake in water utility Aguas Andinas, the government entity is now looking to offload 24.4% of Esval and 38.4% of Essbio, as the Chilean government proceeds with an asset sale plan to help with earthquake recovery-related budgetary needs. The plan, according to a road show presentation, is to offer 10.2bn class A and C Essbio shares, which would raise about CLP264.3bn ($573m) based on Thursday’s closing prices. It also plans to sell 3.62bn Esval class A and C shares, which would raise about CLP361.9bn ($780m) at Thursday’s closing prices. However, each of the share classes are rather illiquid, with Essbio having a 5.4% free float and Esval less than 1%, making size estimations tricky. The auction and the price announcement are both expected July 15. Corfo is set to keep a 5.0% position in each company, both of which are controlled by the Ontario Teachers’ Pension Plan. Banchile, Bank of America Merrill Lynch and IM Trust are managing, the same trio that handled Aguas Andinas.
Banregio Heads for Bolsa
BanRegio has launched its IPO, targeting a more than MXP2bn ($172m) size. The Mexican bank, which focuses on lending to small and medium-sized businesses, plans to price July 14 the sale of 56.7m shares at MXP31.50-MXP40.00 each. This would mean a MXP2.33bn transaction if done at the MXP35.75 midpoint and a 15% greenshoe is exercised. The base deal includes a second sale of 18.9m share from controlling shareholders. The transaction represents a 19.6% stake in BanRegio, which is raising funds to expand its operations. Banamex and BBVA Bancomer are leads. BanRegio had MXP53.5bn in total assets at year-end 2010, up 12.3% from 2009. Corporate loans constitute 80% of its MXP24bn loan portfolio, with a stated focus on small and medium-sized businesses. Founded in Monterrey in 1949 by Manuel Santos Gonzalez as Banco Regional del Norte, the lender is present in 13 Mexican states in the north and center of the country. The deal would be the third IPO in Mexico this year, after Aeromexico (MXP3.89bn) and Cruz Blanca (MXP743m).