HRT Participacoes has issued BRL1.27bn in new shares via a rights offering. HRT has issued 652,575 new shares at BRL1,950 each to holders of Canada’s UNX Energy, which it acquired in February. The price was agreed to at the time of the acquisition and represents an 18% premium to Thursday’s BRL1,650 close. Other shareholders as of April 19 have until May 20 to subscribe at the same price, to bring the total number of new shares to as much as 1.35bn. Separately, a group of 14 shareholders, including MSD Energy Investments, Perella Weinberg Partners and Highfields Capital, sold 503,000 shares at BRL1,650 each, flat to Thursday’s closing price. The group was eligible to sell as many as BRL2.4bn shares following the conclusion month of a lock-up period earlier this that was in effect following HRT’s BRL2.62bn IPO in October of last year. Credit Suisse managed the block trade. HRT shares closed at BRL1,610 Friday.
Category: Equity
Evolving Growth Play
As Brazil’s middle-income segment continues to grow, a straightforward equities buy has become trickier stock-picking terrain. Inflation and government policy are the biggest risks.
LatAm Equity Takes in Fresh Money
LatAm equity funds took in $57m for the week ended April 27, according to EPFR Global. That is the first time LatAm funds took in new money since the second week of January. Brazil equity funds posted outflows of $21m, the fourteenth time in 17 weeks they have seen outflows. Mexico funds also had outflows of $3m. GEM funds took in $1.8 billion during the week and extended their current inflow streak to five consecutive weeks during late April, making it their longest since a 29 week run ended during the third week of December. Performance was negative for the week, as EM funds were down 0.21% for the week ended April 28, although they are up 3.44% ytd, according to Lipper. LatAm funds dropped 1.36% for the week, and are down 0.52% ytd. Meanwhile, global small and mid-cap funds are up 1.42% for the week and 7.96% ytd.
Scylla and Charybdis
Peruvians went to the polls in April to send nationalist Ollanta Humala into a June 5 runoff with Congresswoman Keiko Fujimori, setting up a battle between right and left that […]
Slim Miner Approves Capital Raise
Mineria Frisco, the Mexican mining company controlled by Carlos Slim, is preparing to raise as much as MXP11.75bn through a rights offering, it says. To finance the acquisition of an additional stake in Minera Tayahua, it plans to offer holders the rights to 250m shares at MXP47 each. Up to 120m shares are to be acquired by Tayahua holders in the deal. Frisco owned 51% of the Mexican lead, zinc, silver and copper project, and is increasing its stake by 40.2%. Frisco closed Friday at MXP49.63.
The Arches Turn Golden
With so many IPOs failing to attract the large foreign demand seen in 2006-2007, the $1.25 billion New York debut of Arcos Dorados gave ECM a shot in the arm. […]
Luiza IPO Raises BRL926m at Bottom of Range
Magazine Luiza has priced a BRL926m IPO at the bottom of its price range, as equity investors continue to find valuations high even among stories they consider attractive. The Brazilian electronic goods and furniture retailer sold 38.6m primary and 19.3m secondary shares, at BRL16 each, according to the CVM. The total includes the exercise of a 15% greenshoe. Investors had said they found the deal attractive at the bottom of the BRL16-BRL21 price range, but rich at the midpoint or above. “This is a good play for the story of the emerging C and D classes, the valuation is the only concern,” says a New York-based EM equity investor prior to pricing. The result is a familiar one among Brazilian IPOs this year, as Luiza is only the fourth to price within its price range, with others falling below or choosing to postpone. Luiza’s selling shareholders in the secondary portion include US private equity firm Capital International, a stakeholder since 2005, and members of the founding Donato and Garcia families. The retailer, based in Franca in Sao Paulo state, plans to use 30% of the proceeds for new stores and acquisitions, 30% for working capital, 20% for improving old stores and 20% for technology and logistical improvements. Banco do Brasil, BTG Pactual, and Itau managed the sale. The transaction may mark the beginning of a lull in new Brazilian equity issuance. Six deals are filed, according to the CVM, and many others are rumored, but nobody has launched a deal since Luiza began marketing in the first week of April. The regional focus now shifts to Chile, with Corporacion Farmaceutica Recalcine scheduled to price Wednesday, an IPO that could top $400m equivalent.
Brazil Stocks Cut, Colombia Raised: MS
Brazilian equities were downgraded to equal-weight from overweight by Morgan Stanley, while the bank upgraded Colombian equities from underweight to equal-weight, it says. Brazil’s rankings measuring earnings revisions and earnings growth fell relative to other markets, Morgan Stanley says, and were the main driver of the downgrade. The majority of the negative earnings revisions were in the domestic sectors like financials, industrials, utilities and consumer discretionary. Also, a strong real has driven a mismatch in which domestic demand remains robust while production has weakened sharply, the bank explains. This, in turn, has led to a widening current account deficit and heightened inflation risk. Meanwhile, Colombia’s consistent positive earnings and positive delta in earnings growth forecasts have encouraged an upgrade for its stocks, Morgan Stanley says. The MSCI Colombia index has also sold off recently, and “from a macroeconomic perspective, supportive global conditions and strong domestic demand should continue to underpin a sustained economic expansion,” it says.
Luiza Heard Covered Ahead of IPO
Magazine Luiza’s IPO is heard to be subscribed just over 1x as of Wednesday afternoon, according to investors. The transaction that could top BRL1bn is scheduled to price tonight. The Brazilian electronic goods and furniture retailer is offering 37.8m primary and 16.6m secondary shares, at BRL16-BRL21 each. At the BRL18.50 midpoint, this would mean a BRL1.07bn deal, assuming the exercise of a 15% greenshoe. A 20% hot issue is also available. “At 16 there would be upside, at 18 to 20, there is not much left on the table. It’s a great story but a high valuation,” says a New York EM equity investor looking at the deal. Luiza would put 30% of the proceeds toward new stores and acquisitions, 30% for working capital, 20% for improving old stores and 20% for technology and logistical improvements. Selling shareholders include US private equity firm Capital International, a stakeholder since 2005, and members of the founding Donato and Garcia families. The float could be as high as 36% after the offer, according to the prospectus. Luiza was founded in 1957 in the state of Sao Paulo. Banco do Brasil, BTG Pactual, and Itau are managing the sale. The chain generated BRL319.9m in Ebitda in 2010, up from BRL64.6m in Ebitda for 2009, according to the prospectus.
Usiminas Pension Fund Seeking $770m
The Usiminas employee pension fund is understood to be seeking around $770m for its 10.1% stake of the company’s voting stock, according to a banker familiar with the transaction. The pension fund, known as Caixa dos Empregados da Usiminas, has hired Credit Suisse to sell the stake, according to bankers familiar with the deal. According to Usiminas’ website, Nippon Steel is the largest voting shareholder, with a 27.8% stake, followed by Grupo Votorantim/Camargo Correa, which own a combined 26.0% of the voting shares.