Mexico’s first equity IPO in 22 months, Grupo Comercial Chedraui, was in limbo late Thursday, with no firm information available, though bankers claimed it was still coming. Despite claims Wednesday that the book was already several times oversubscribed, evidence of this had not yet materialized by 2300 EST. People close to the process say a price had basically been agreed on, but final terms were still being discussed. The family-owned operator of supermarkets, hypermarkets, and warehouse stores in southeastern Mexico was hoping to get MXP5.57bn from the sale of 139.3m primary shares and 15.3m secondary units. This assumed it got done at the midpoint of a MXP32-MXP40 targeted range, but Chedraui was not helped by global equity market volatility amid fears of European sovereign defaults. Shares will be sold in Mexico and the US, with roughly 60% expected to be placed internationally, bankers say. The 154.6m unit total includes a 19.9m share overallotment, and represents a 14.2% stake in the company. Chedraui is raising funds to refinance debt and for other general corporate purposes. Banamex and BBVA Bancomer are leading the Mexican portion of the deal, with Citi and Credit Suisse on the tranche to be done in the US.
Category: Equity
UBS Buys Back Into Brazil
Almost a year to the day after UBS announced it was exiting Brazil through the sale of Pactual, the Swiss bank has unveiled an agreement to acquire Brazilian brokerage Link Investimentos for BRL195m. A purchase had been expected, since acquisition is understood to be the fastest route to acquiring a license, a process that is apparently fraught with red tape. And UBS is heard very keen to re-establish a Brazil base as it works to reconstruct a LatAm platform that was cut to shreds during the financial crisis. “We view Brazil as a strategically important market with significant growth potential,” says Alex Wilmot-Sitwell, co-CEO of UBS Investment Bank. “The acquisition of Link Investimentos provides a platform for UBS to re-build our presence and expand our footprint in Brazil,” he adds. Link is a private partnership with 279 staff, including 73 partners, and offices in Sao Paulo and Curitiba. UBS agreed to acquire 100% of the shares of Link Holding Financeira, the parent holding all shares of the licensed operating company Link Investimento. Its businesses will be integrated into the investment bank, wealth management, and asset management divisions of UBS and the combined entity in Brazil will be re-branded as UBS. UBS will not acquire Link’s retail online brokerage business. Link was founded in 1998 as an independent broker-dealer, and offers equities, equity research and equity derivatives, as well as exchange traded FX, fixed income and commodity products. The acquisition is expected to close during Q4 2010, subject to central bank approval. In April 2009, UBS announced the sale of Pactual for $2.5bn to BTG. In Q4 last year, the Swiss bank started to rebuild LatAm with a string of senior appointments and new hires.
Davivienda Approves Local IPO
Colombia’s Banco Davivienda says it has authorized an IPO on Colombia’s stock exchange. The bank will sell up to 50m new non-voting shares and permit minority holders to convert as much as 50% of their shares in the bank into the newly listed units. Davivienda does not indicate the size or timing of a transaction. The IPO would be the first in Colombia since Helm Banco de Credito raised $113m December 2007, according to Dealogic.
Mexican IPO Icebreaker Shopped
Bankers managing Mexico’s first equity IPO in 22 months – Grupo Comercial Chedraui, scheduled to price this afternoon – claim the book is already several times oversubscribed. The family-owned operator of supermarkets, hypermarkets, and warehouse stores in southeastern Mexico could get MXP5.57bn from the sale of 139.3m primary shares and 15.3m secondary units. This assumes it gets done at the midpoint of a MXP32-MXP40 targeted range, but Chedraui is not helped by global equity market volatility amid fears of European sovereign defaults. Mexico’s IPC index is down 3.4% since the deal was announced mid-April. However, bankers running the trade note strong appetite for the Mexican retail sector from both individuals and institutional investors. Retailers Walmex and Soriana each rebounded slightly after each losing 4.3% in Tuesday’s slide, compared to a 3.2% loss on the bolsa. Both retailers have outperformed the broader market’s 2.6% gain this year, however, with Soriana up 15.8% and Walmex 3.8% firmer. Shares will be sold in Mexico and the US, with roughly 60% expected to be placed internationally, bankers say. The 154.6m unit total includes a 19.9m share overallotment, and represents a 14.2% stake in the company. Chedraui is raising funds to refinance debt and for other general corporate purposes. Banamex and BBVA Bancomer are leading the Mexican portion of the deal, with Citi and Credit Suisse on the tranche to be done in the US. The issuer was founded in 1920 by Lazaro Chedraui and operates the Chedraui and Super Chedraui chains in Mexico and El Super in the US. In 2005 it acquired Carrefour’s Mexican operations. Other Mexican issuers lining up for possible IPOs include broker Actinver, grower Proteak and developer Tres Marias.
Deutsche Hires From CS, BAML
Deutsche Bank’s has hired Rodrigo Rocha as a director and head of credit syndication for Brazil DCM, reporting to Nuno Correia, head of fixed income sales and DCM coverage, based in Sao Paulo. Rocha joins Deutsche from Credit Suisse where he was a director in EM fixed income sales. Before that, he was head of domestic and international EM fixed income sales at Unibanco. Meanwhile, Jorge Classing has joined as a director in EM fixed income trading, based in Mexico City and reporting to Luis Betancourt, director and head of trading in Mexico. He was previously head of fixed income trading in Mexico for Bank of America. And Alex Coutinho has joined Deutsche as a director in global markets structuring – credit, based in Sao Paulo and reporting to Marcelo Ferraz, director of global markets structuring. Coutinho joins from Spinnaker Capital, where he was a buyside research analyst covering debt and private equity. Jose Luis Azevedo de Oliveira joined the German bank from Itau, as a VP in local EM fixed income trading, based in Sao Paulo. He reports to Claudio Holanda, director of local EM fixed income trading in Brazil. From Santander, Frederico Massote has joined as a VP in local EM fixed income trading in Sao Paulo, also reporting to Holanda. From JPMorgan, Deutsche has appointed Cristian Lara as VP for DCM sales in Sao Paulo, heading local corporate credit origination in Brazil. He reports to Correia and Brad McKee, MD. Meanwhile, Marcelo Puga has joined as a VP for equity derivatives sales in Sao Paulo. He was formerly at Credit Suisse-Hedging Griffo, where he was head of equity derivatives for Brazil. He reports to Andre Rosenblit, head of global markets equity in Brazil. “As we continue to expand our client offering in Latin America, it is imperative that we have a strong presence in local markets,” says Karan Madan, Deutsche’s head of global markets for LatAm.
Mexican Broker Targets May IPO
Mexican Brokerage Actinver is planning to raise MXP745m-MXP901m from an IPO on the Bolsa, according to regulatory documents. The sale of 65.3m primary and 13.1m secondary shares – representing about a 15% stake – is expected to price in May within a stated range of MXP9.50-MXP11.50. Actinver aims to raise funds to capitalize the bank, for working capital and to repay debt to the Prudential Group, from which it last year purchased Prudential Financial Operadora de Sociedades de Inversion and Prudential Bank. The brokerage had MXP1.37bn in operating income in 2009, according to its filing. Actinver’s own brokerage is managing the transaction. Following legal changes allowing pension funds greater equity investment flexibility, a line of debut issuers is starting to form. Developer Tres Marias and grower Proteak plan to raise up to MXP1bn each. Retailer Grupo Chedraui would be the first Mexican IPO in nearly 2 years if it lands a MXP4.3bn-MXP6.2bn offer on its scheduled April 29 launch date.
Simoes IPO Limps Over the Line
Julio Simoes Logistica has priced its IPO a few days late and several million reais short of target, highlighting continued pushback by investors to what they deem inflated pricing by issuers and their bankers. The deal raised BRL446.5m after pricing 55.8m units at BRL8.0, short of the BRL8.5-BRL9.5 target, which was well below where the Brazilian logistics provider had started marketing. The sale was postponed from Thursday, and the range was chopped from an initial BRL10.75-BRL13.75 as Simoes haggled over price with picky investors. Total deal value could increase modestly to BRL494.5m if a 6.0m unit greenshoe is exercised, but it is far from the BRL770m aimed for. Proceeds of the Simoes IPO will be used for acquisitions, reinforcing working capital and reducing debt. Bradesco, Credit Suisse, BTG Pactual and Banco do Brasil coordinated the offer, with BESI Brasil, Banco Votorantim and HSBC as co-managers. The story of equity valuations failing to hit target is a familiar one this year in Brazil, with only 2 of 7 IPOs pricing within range so far. Market participants blame issuer greed and the inability of underwriters to properly advise their clients. “Brazil has done extremely well, so sellers believe that demand should be there for the level at which they want to sell,” Nicholas Morse, who manages $8.5bn in Latin American equities at Schroders Asset Management, tells LatinFinance. “Eventually, the market resolves it for everyone. If an issue is not popular, they either they cut the price or they pull the issue. Recently for most issues it’s been one of those routes,” he adds. Follow-on issues, which have fared a bit better this year, are up next, from meatpacker JBS April 27, followed a day later by Banco Cruzeiro do Sul. None of the remaining IPO issuers in the Brazilian regulatory pipeline have yet specified price dates. Mexican retailer Grupo Chedraui could bring its country’s first float in nearly 2 years as soon as April 29.
Downsized Brazil IPO Drops Off Radar
Equity markets await final terms on an IPO from Brazilian logistics operator Julio Simoes, with lead managers on the transaction insisting that it would price, though no official word by the close Friday. After a delay from Thursday’s scheduled pricing, the issuer announced it had revised its target for the sale of 55.8m shares to BRL8.50-BRL9.50 from BRL10.75-BRL13.75. At that rate, Julio Simoes could raise BRL499.8m-BRL558.6m, or more if a 8.4m unit greenshoe and 11.2m share hot issue get done. All of Brazil’s 2010 IPO’s have struggled this year, with only 2 of 6 pricing within the target range. If the IPO gets done, proceeds will be used for acquisitions, reinforcing working capital and reducing debt, the company says in a preliminary prospectus. Bradesco, Credit Suisse, BTG Pactual and Banco do Brasil are leading the offer, with BESI Brasil, Banco Votorantim and HSBC as co-managers.
Simoes Postpones Brazil IPO
Brazil’s Julio Simoes Logistica expects to price its IPO today, according to an official at one of the lead managers, after delaying from Thursday. No reason is given for the delay. The logistics operator aims to sell 55.8m shares at BRL10.75-BRL13.75, plus a possible 8.4m unit greenshoe and 11.2m share hot issue, according to regulatory documents. Proceeds of the IPO will be used for acquisitions, reinforcing working capital and reducing debt, the company says in a preliminary prospectus. Bradesco, Credit Suisse, BTG Pactual and Banco do Brasil are leading the offer, with BESI Brasil, Banco Votorantim and HSBC as co-managers. Investors are pushing back on Brazil IPOs since they are unwilling to pay now for future hypothetical growth. They are also keeping powder dry for jumbos from Petrobras and Banco do Brasil, while some note bitter memories from the last IPO boom of 2007.
BB Defines Jumbo Follow-on
Banco do Brasil’s board has authorized it to sell up to 286m shares through a primary offering in the Bovespa. Such an offer would raise BRL8.74bn at Wednesday’s closing price of BRL30.55. The offer is one of the most anticipated this year in Brazil, along with an expected follow-on from Petrobras, and equity investors are heard keeping powder dry for both. Additionally, the bank’s controlling shareholders plan to sell an undisclosed portion of shares via a secondary offer, with additional details to be released as the regulatory process progresses. No timetable is given for the primary operation, which still needs regulatory approval. Separately, Banco do Brasil has been authorized by the US Federal Reserve Board to operate as a retail bank in US.