Valid, the Brazilian payment processor known until last year as ABnote, has initiated an ADR program in order to increase liquidity. The ADR will be worth one share and trade on the OTC. Citi is the depository institution. Shares closed at BRL20.00 ($12.66) on Tuesday.
Category: Equity
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EDP Sets Timing for EDB Selldown
Energias de Portugal (EDP) has set June 29 as the date of its follow-on offer of 19.9m Energias do Brasil (EDB) shares, and a roadshow is scheduled to begin June 20. At Monday’s BRL38.33 closing price, such a transaction would raise BRL763m ($480m). A 10% greenshoe is also possible. The Portuguese utility owns 49.1% of EDB and would reduce that to 35.3% after the sale, if the 10% overallotment is included, with the free float increasing to 48.8% from 35.0%. Espirito Santo, Itau, Morgan Stanley and Santander are leads. EDP had said in March that it aims to raise EUR500m though asset sales this year.
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LatAm Equity Markets Set to Rise: Citi
LatAm’s equity markets are expected to return 32% by the end of the year, according to a report by Citi. Growth will be driven primarily by Brazil’s Bovespa, which the bank expects to generate a return of 38.1% for the year to reach 87,500. IPO activity is expected to continue at a healthy pace. Despite fears that LatAm equity issuance is overdone, Citi notes only 15 companies have come to market so far this year, compared to 37 companies going public in a single quarter during the 2007 boom. “We see little risk of deal exuberance in Latin America,” Citi says. The amount of equity raised by LatAm IPOs and follow-ons remains far below 2007 levels, but there has been an increase in sector and country diversification. Brazil issuance represented 89% of activity over the past two years, but that figure has dropped to 58.2% this year, due to an increase in issuance from other countries, rather than a decrease in volumes from the region’s largest economy.
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Kroton Sets FO Date
Brazil’s Kroton will begin marketing an equity follow-on June 15 and plans to price June 29, it says in a prospectus. The private education company plans to sell 19.5m units, each consisting of one ordinary share and six preferred shares. Such a sale would raise BRL391m ($244m), based on Friday’s BRL20.05 per unit closing price, or BRL450m if a 15% greenshoe is included. A 20% hot issue is also available. Of the 19.5 units, 1m are secondary shares to be sold by four minority holders, as are up to 1m units of the hot issue. The issuer is seeking to improve liquidity and raise funds for expansion. Bradesco, BTG Pactual, Itau and Santander are managing.
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LatAm Sees Equity Inflows
LatAm equity funds saw $104m in inflows for the week ended June 1, according to EPFR Global. EM funds saw their first weekly inflow in three weeks with $836m. Performance was positive, as EM funds rose 1.94% for the week ended June 2, and are up 0.47% ytd, according to Lipper. LatAm funds were up 1.66% for the week, but remain down 2.09% ytd. Meanwhile, global small and mid-cap funds rose 0.61% for that period, and are up 4.20% ytd.
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Investors Anticipate Narrow Keiko Win
Investors and economists say they are anticipating a narrow win by Keiko Fujimori over Ollanta Humala ahead of Peru’s presidential election Sunday. Shares of Peruvian companies traded in the US did well Thursday on the strength of private polling suggesting Fujimori’s lead was widening, but investors warn that political risk continues on the possibility that Humala might contest election results if the margin of victory is within a few percentage points. “Humala already said that he thinks there was some vote rigging involved in the first round, so he does seem to be setting the market up for a challenge,” says David Spegel, head of EM strategy at ING. “If there’s only a 2% margin [of victory for Fujimori], that increases the likelihood that he’s going to demand a recount. If Fujimori wins by a 5%, or even more than a 3%, than the chances of a recount going in favor of Humala are that much reduced.” Peru’s 5-year CDS is trading at around 143bp, down from an intraday high of 177bp on April 26, suggesting that the market is pricing in a slightly greater probability of an Humala win, Spegel says, despite the polling. Eduardo Suarez, senior emerging market strategist at RBC, says that pricing is fair since there is a greater potential downside to an Humala victory than there is upside to a Fujimori victory. “On CDS, if Keiko wins it probably goes back to 110bp or so,” Suarez says. A win by Humala, on the other hand, could cause the 5-year to widen out to close to 200bp, he says. “If she wins and the vote is uncontested and there’s a margin of 4%-5%, clearly it will be a complete relief rally down to pre-election levels, almost instantaneous,” says Siobhan Morden, head of LatAm strategy at RBS. “The problem is, any relief rally would be interrupted if there were social unrest, or if it [the election] is contested or there is uncertainty on the final outcome.” The combination of uncertainty going into the weekend combined with the stark contrast in potential outcomes has
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Slim’s Ideal Plans Follow-on
Impulsora del Desarrollo y El Empleo en America Latina, or Ideal, plans to raise up to MXP9.2bn ($795m) through a public equity sale, it says. The sale would be available internationally as well as in Mexico, and consist of two-thirds primary shares and one-third secondary shares sold by the Carlos Slim foundation. It does not detail the timing or exact number of shares to be sold. The concession operator controlled by Carlos Slim would use the proceeds for the company’s growth. Banamex and Inbursa will manage the sale. The plan still must be approved by shareholders. Ideal’s shares closed at MXP17.80 Wednesday.
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Abril Looks to Bovespa
Private education company Abril Educacao is planning to IPO in Brazil, according to a regulatory filing. The publisher and operator of schools plans to sell both primary shares and secondary shares held by members of the controlling Civita family and private equity funds managed by BR Investimentos and Banif. It does not give details as to the size or timing of the sale. Abril plans to use 63% of the proceeds for acquisitions, 27% for paying off debt, and 10% for opening new schools and improving old ones. Abril says it would be the first listed education company in Brazil with a focus on basic and pre-college education. It also specializes in book publishing, technical education, preparation for public sector exams, and plans to enter the fields of language education and distance learning. Bradesco, Credit Suisse, Itau and JPMorgan are managing. Abril booked Ebitda of BRL102.5m ($64.5m) in 2010, up from BRL85.8m (54.0m) in 2009, according to the prospectus. Brazilian higher education specialists Estacio, Kroton and Anhanguera are already listed, turning to the public markets to fuel what is expected to be tremendous growth as a rising middle class looks to spend on education. Kroton has filed for a follow-on expected to raise BRL400m ($252m).
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Brazilian Fashion Retailer Plans IPO
Brazil’s Inbrands has registered for an IPO, according to the CVM. The owner of several clothing brands and retail locations in Brazil plans a primary and secondary sale, and has hired Bradesco, BTG Pactual, Credit Suisse, Itau and Morgan Stanley to manage. It has not indicated the size or timing. The transaction’s secondary shares are to be sold by 10 individual shareholders, joined by the PCP private equity fund and two additional individuals if a 15% overallotment is exercised. Inbrands is controlled 48% by the PCP private equity fund and 49% by a group of individuals tied to the Ellus brand, one of the founding brands in the Inbrands portfolio. Proceeds will be used for growth, including store expansion, acquisitions, developing distribution networks and developing the issuer’s online businesses. Inbrands booked BRL20.4m in Ebitda in 2010 and BRL10.3m in 2009, according to its prospectus. It owns or franchises 129 stores throughout Brazil, it says, mainly in shopping malls. With the average ticket size of its main brands indicated at BRL140-BRL400, according to the prospectus, this consumer play may not be in line with the trend of emerging middle class-focused equity issuers. However, Arezzo’s BRL566m January IPO showed that there is demand for names that might be selling to the top portion of the consumer pyramid.
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Los Grobo Plans Brazil Spinoff
Argentine grower Los Grobo plans to spin off some of its Brazilian businesses in an IPO, according to regulatory filings. LG Agronegocios & Participacoes, as the new company is to be called, is planning a primary share sale, as well as a secondary sale of shares belonging to members of the Grobocopatel family and Vinci Partners-backed investment company Sollus Capital. The new company would combine Los Grobo’s growing and 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%. Proceeds from the sale would be used for acquisitions, working capital and equipment. Los Grobo, which produces soybeans, corn, wheat and sugar in Brazil, Argentina, Uruguay and Paraguay, doesn’t give details on the timing or size of the IPO. Bradesco, BTG Pactual, Credit Suisse and Itau are managing. Los Grobo’s Brazilian operations recorded BRL35.7m ($22.7m) in Ebitda in the 9-month period to March 31, compared to a BRL1.9m loss in the corresponding period in the previous year, according to the prospectus. Sollus’ land development business recorded BRL36.8m in the 9 month period to March 31 after a loss of BRL13.7m in the corresponding period in the previous year. CMAA lost BRL9.2m in the 9 month period to March 31, following a gain of BRL23.4m in the corresponding period the previous year. The Brazilian unit would be 56% controlled by members of the Grobocopatel family. Funds administered by Vinci Partners also own a stake in the unit. Agricultural equity offerings have been tricky in 2011, with Adecoagro’s $314m US debut raising less than planned, and BrasilAgro pulling a follow-on recently.