Despite the bad news from Karoon Gas’ pulled listing last week, Brazilian IPO hopefuls Droga Raia and Desenvix Energias Renovaveis still aim to price in December, according to bankers on the transactions. Though market conditions remain questionable, both issuers are said to have documentation ready for launches in time to price by mid-December. Neither have indicated the size of their float. Both should benefit from being outside the oil sector, investors say, though renewable power generation developer and operator Desenvix, like E&P startups Karoon and HRT, involves greenfield risk. Drugstore chain Droga Raia has not indicated the amount of the sale, which will raise funds for working capital and the reduction of debt. It has hired Itau as bookrunner and lead manager, alongside Credit Suisse and Banco do Brasil as bookrunners. Desenvix has hired JPMorgan as lead coordinator, with BTG and Santander as bookrunners. It is raising funds for its 2011- 2015 project pipeline.
Category: Equity
EM Equity Funds See Outflows
In the week ended November 17, GEM equity funds saw outflows of $915m and BRIC funds lost $9m, but LatAm equity funds took in $60m, according to data from EPFR Global and Itau. Meanwhile, Lipper data show that performance of EM equity funds was also negative, down 2.24% in the week ended November 18, but still up 16.01% year-to-date. LatAm funds were down 0.83% in the week, but are up 15.99% ytd and global small and mid-cap funds, down 1.24% in the week and up 16.73% ytd.
Karoon Backs Off Brazil IPO
Karoon Gas Australia has indefinitely postponed the IPO of its Brazilian unit that had been expected Thursday, citing market conditions, according to bankers on the deal. Though Brazil’s Bovespa rose 1.5% Thursday along with global equity markets, selloffs this week on discouraging European headlines appear to have weakened investor appetite. More specifically, bankers on the trade note the aftermarket performance of fellow start-up E&P HRT, which only climbed back to its BRL1,200 offering price during Thursday’s rally, after having traded down as low as 7.4% since its October IPO. After previously postponing for a week, Karoon Petroleo e Gas, was to offer 1.03m primary shares, representing a 31.90% stake, at a range of BRL1,025.00-BRL1,275.00 each, raising BRL1.18bn if priced at its midpoint. Karoon planned to use the proceeds to drill in 5 Peruvian and 7 Brazilian blocks, and can access funds from the parent in the short term, according to a banker on the deal. An eventual stock market listing is still a possibility, he adds. Morgan Stanley is lead coordinator of the deal, with BTG and Credit Suisse as bookrunners. Fellow oil sector debutant Queiroz Galvao is heard waiting until 2011 for its own IPO. Other Brazil equity deals in the pipeline, including Pharmacy Droga Raia and educator Anhaguera, still aim to price deals by the end of the year.
Compartamos Holdco to List
Publicly listed Mexican micro lender Banco Compartamos plans to have its holding company, Compartamos SAB, list on the Mexican stock exchange. The move would simplify the bank’s corporate structure, which would consist of a single publicly listed company rather than a privately held holding company with a majority stake in a publicly listed operating company. The change in structure will be achieved through an exchange offer whereby shareholders in the operating company will receive 4 shares in the holding company for every share they own. In order for the offer to take effect, the holding company must receive at least 85% of the shares in the operating company. If more than 95% of the operating company’s shares are tendered, it will delist. The offer expires December 13. The bank’s management will not change, Compartamos says, adding that the deal will not result in any cash proceeds either for the bank or the holding company.
Karoon Gas IPO Due Today
Karoon Gas Australia plans to price the IPO of its Brazilian subsidiary today, a deal expected to raise more than BRL1bn. After a week’s postponement, Karoon, the owner of exploration blocks in Brazil and Peru, plans to sell 1.03m primary shares, representing a 31.90% stake, at a range of BRL1,025.00-BRL1,275.00 each. The deal would raise BRL1.18bn if priced at its BRL1,150 midpoint. A 15% greenshoe is also available. Karoon plans to use the proceeds to drill in 5 Peruvian and 7 Brazilian blocks. It claims to have a combined unrisked mean estimate of 2.15bn barrels of reserves for both countries. Morgan Stanley is lead coordinator of the deal, with BTG and Credit Suisse as bookrunners. It is the latest deal in a series of equity offerings from the Brazilian oil and gas sector. Shares of E&P debutant HRT have traded down 5.8% since its IPO and preferred shared of Petrobras are down 1.5% since its follow-on. “These represent long-term projects and investors enter with a long-term view – the short-term performance of these stocks is less important,” says a Sao Paulo-based asset manager. Queiroz Galvao will likely follow with an IPO of its oil assets in December.
Ecopetrol Announces Float
Ecopetrol says it plans to float up to a 9.9% stake early next year to fund its investment plans. The Colombian oil company’s 2011 investment plan requires financing of $6.06bn which it says could come from the stake sale, fundraising in either the local or international capital markets, credit facilities with commercial banks, export development credits and the sale of non-strategic assets. In addition, the company’s subsidiaries and affiliates will require $1.458bn in financing. Ecopetrol’s financing needs could be even higher if it decides to make acquisitions next year, it says.
Nyrstar Targets Mexico Mine
Belgian metals company Nyrstar will make an all-cash offer to acquire Farallon, owner of the Campo Morado mine in Mexico. Nyrstar says it will offer EUR296m for the outstanding shares of Farallon, which trades on the Toronto stock exchange. The Morado mine comprises approximately 12,000 hectares in 6 mining concessions, located 160km southwest of Mexico City and produces high grade zinc, copper, lead, gold and silver. The offer will be financed from existing credit facilities. Farallon has agreed to pay Nyrstar a break-up fee of approximately CAD12m in certain circumstances.
Vale to Buy Fertilizantes Stock
Vale plans to buy up the remaining free float of its Vale Fertilizantes unit, it says, through an auction process December 20. The miner plans to pay $12.0185 equivalent per common share in the tag along, it says. The price corresponds to the $3.27bn that Vale agreed to pay Fertilizantes’ controlling group. Official offering documents will be published Thursday, Vale says. The offer is part of a larger plan to consolidate all of Vale’s fertilizer assets into a large entity that can be taken public next year.
Camanchaca Plans Chile IPO
Pesquera Camanchaca plans to roll out Chile’s first IPO in almost a year, targeting a $250m equivalent raise. The fishery intends to sell up to 1.26bn shares, likely a 20%-30% stake, according to a banker on the trade. An initial prospectus has not been filed, but the banker says the issuer aims to start investor meetings soon with the aim of pricing by the end of the month. Proceeds would fund the company’s investment plan. Banchile and Larrain Vial are managing the sale. Founded in 1965, Camanchaca exports seafood products principally to Japan, US and Europe. The last IPO in Chile was soccer team holdco Cruzados, which raised CLP12.4bn ($24.8m) in December 2009, according to Dealogic. If done at $250m equivalent, Camanchace would be the biggest IPO since a $400m sale in 2005 from Inversiones Aguas Metropolitanas.
EM Equity Funds Close to Record
EM equity funds are close to setting an all-time yearly inflow record, EPFR Global says. Net inflows in the year up to November 10 total $79.9bn. The record, set last year, is $83.3bn. However, according to Lipper, EM equity funds were down 1.65% in the week ended November 11, though are still up 18.60% year-to-date. Meanwhile, LatAm funds lost 3.48% in the week, but are up 17.34% ytd and global small and mid caps are down 0.86% in the week and up 18.25% ytd.