Category: Equity

Canadian oil company Canacol Energy has received a “speculative buy” rating from Medellin-based brokerage Bolsa y Renta ahead of its listing on the Colombian Stock Exchange (BVC) – which is expected to take place within the next 2 weeks – says equities analyst Carlos Gonzalez. Bolsa y Renta has a COP2,080 per share target price for Canacol’s stock. Canacol, which already trades on the TSX Venture Exchange, will not issue new shares. Instead, it will allow common shares that are currently issued to be traded through the BVC. The company has 11 exploration and production blocks in Colombia and plans to invest $37m in the country. It also has operations in Guyana and Brazil. Citi is handling the BVC listing. Canacol closed Monday at CAD0.88 (COP1,563).

As local and international investors hoard cash for a $30bn Petrobras follow-on, the chance of new Brazil equity supply is slim short-term, say ECM bankers. The state-controlled oil producer is expected to issue in September, and the market is looking to the deal to provide a price benchmark. “There should be no more IPOs this summer – everyone is waiting for Petrobras,” says Enrique Corredor, head of BTG’s ECM syndicate. “There is a lot of pent up demand. I think the [Petrobras] deal will go well, and open up appetite for the IPO market,” the banker adds. He notes that recent jumbo follow-ons from Itau and Banco do Brasil (BdB) have whet investor appetite. Pricing is a challenge without comparables, says Matias Santa Cruz, executive director for LatAm ECM at UBS. It will get easier once issuance picks up, as happened during the 2005-2007 wave of Brazil IPOs, Cruz adds. Corredor points out that the average IPO has been 1.4x subscribed this year, versus 3.8x in 2007, and that most have priced below target. “Bankers have a responsibility to advise issuers to come with more realistic valuations. Moving forward, IPOs you will see will be more realistic in valuation expectations,” he adds. Despite a tendency for issuers to seek pricing well above what investors want to pay, he notes that recent new issues traded up, except for shipbuilder OSX. They are also beating the Bovespa, showing investors that there is money to be made in Brazil. Corredor and Santa Cruz spoke Thursday at a panel in New York organized by the Brazilian-American Chamber of Commerce.

A July 9 Daily Brief entitled “BM&FBovespa Whispers Price on 10-Year” incorrectly states the initial price talk on BM&FBovespa’s $612m 10-year. The deal was whispered at T+275bp area.

Brazil’s Renova Energia has priced a scaled back IPO of 10m units at BRL15.0, the low end of the range, to raise BRL150m. The renewable power generation specialist was pitching a price of BRL15.0-BRL17.0 for 10.0m units plus a potential 3.5m greenshoe and hot issue shares. The 2.0m unit hot issue was not exercised, but the 1.5m shoe may be in the next 30 days. At the top end of the range, it would have raised BRL229.5m. This compares to 27.5m units at BRL19.0-BRL25.0 that Renova sought earlier in the year. Renova pulled the earlier attempt amid market volatility and investor pickiness in the wake of other high-profile shortfalls in Brazil’s equity market including OSX. Santander and Bank of America Merrill Lynch managed the deal, which was heard sold to a limited group of investors.

Brazil’s BM&FBovespa is pricing today an issue of $612m in 10-year bonds, whispered at T+275bp area, according to people close to the trade. The book was heard exceeding $1bn Thursday afternoon. Proceeds will be used to finance the acquisition of a 5% stake in US-based CME Group. In February, BM&FBovespa raised its ownership in the CME to 5.0% from 1.8%. Bank of America Merrill Lynch, Bradesco, HSBC and JPMorgan are the leads on the BBB+/Baa2 bond issue.

Brazil’s Renova Energia is pricing today a scaled back IPO that could raise up to BRL229.5m. The renewable power generation specialist is pitching a price of BRL15.0-BRL17.0 for 10.0m units plus a potential 3.5m greenshoe and hot issue shares. This compares to 27.5m units at BRL19.0-BRL25.0 that it sought earlier in the year. Renova pulled the earlier attempt amid market volatility and investor pickiness in the wake of other high-profile shortfalls in Brazil’s equity market including OSX. Santander and Bank of America Merrill Lynch are managing the deal.

Canadian oil company Canacol Energy says it has received approval from Colombia’s financial superintendent to list shares on the Colombian Stock Exchange (BVC) under the symbol CNEC. Canacol, which already trades on the TSX Venture Exchange, says the dual listing will enable it to expand the institutional and retail shareholder base in Colombia, where the majority of its operations are located. The BVC listing does not involve issuance of new common shares of the corporation, or any other securities or derivatives. It is structured to allow common shares of the corporation that are currently issued and outstanding, and trading on the TSX Venture Exchange, to be traded by Colombian investors through the BVC. “We expect Canacol’s listing on the Colombian stock exchange to be completed over the next couple of weeks,” says Chile-based Celfin, which recently opened an office in Colombia. Celfin adds that the firm’s TSX market cap was CAD366m June 30, from over 400m shares outstanding.

Ana Cabral-Gardner has joined Barclays as a Sao Paulo-based MD in the investment banking division. She was previously head of LatAm ECM at Goldman, which she left in late 2008. Barclays says she will cover the retail, consumer and healthcare sectors, reporting to Alceu Lima, head of Brazil investment banking. Lima describes the hire as, “an important step in the continued expansion of our Brazilian investment banking platform.” The UK bank is trying to build competitive LatAm ECM and M&A platforms as a bolt on for existing loan syndications and DCM expertise. It was expected to be one of the biggest hirers of 2010 in Brazil, following the appointment of headhunter Russell Reynolds late last year to help it acquire talent for investment banking and trading. Goldman replaced Cabral in 2008 with Pedro Leite Da Costa as head of ECM in LatAm. Cabral, an MD at Credit Suisse before Goldman, was strongly rumored in November 2008 to have been removed from day-to-day activities by Goldman, amid a reduction of 10% in global headcount.

Tres Marias has again postponed its MXP1bn IPO, after failing to price late Tuesday, following a 3.4% drop in the bolsa amid global equity weakness. “The offering has been postponed until further notice due to market conditions,” says a banker on the trade, which was billed as the third IPO in 2 years from Mexico. The developer had hoped to issue up to 32m shares at MXP30.00-MXP34.32 with the intention of reaching a MXP1bn deal size. Like many smaller Mexican companies seeking growth capital, Tres Marias sought last year to raise funds through a CCD transaction, but decided to go the IPO route after regulatory changes allowed the liquid Afore pension funds to invest in IPOs. The issuer had originally hoped to issue in May and tried again earlier this month. The issuer is developing a “city within a city” mixed-use project in Michoacan state. Ixe is running the IPO.