Category: Equity

In the midst of rough market conditions that have resulted in pulled deals and rocky pricings, OSX, Eike Batista’s oil and gas shipping unit, has filed for an IPO via Credit Suisse and Itau BBA. The company had previously filed a charter stating its board had authorized an equity capital raise of BRL10bn. In another recent development, OSX has picked Hyundai, the Korean industrial that specializes in offshore platforms, to be a partner in OSX. Hyundai is taking a minority stake in exchange for helping assemble a shipyard in the south of Brazil. OSX is likely to count substantially on financing from the BNDES to build the facility, according to executives close to the startup. In addition OSX, which is operating at a loss, will look to the bank market and private investors for additional capital to build up facilities and projects, it says in the prospectus. It also notes that EBX, Batista’s holdco, can provide guarantees to back financing.

Brazilian real estate developer PDG Realty has raised BRL1.6bn through a follow-on priced in one of the worst days the Bovespa has seen in months. The stock fell 3.63% in the session to BRL14.60 and the shares were priced BRL14.50, at virtually no discount. A banker on the deal says Thursday’s drop, which was smaller than the Ibovespa’s 5% plunge, was in itself a substantial discount to recent trading levels. The company sold 97m shares plus a 14.6m share greenshoe to raise BRL1.62bn. Priority investors, which include former Pactual partners and Vinci, the fund formed upon the dissolution of Pactual Capital Partners, purchased around 25% of the issue. Credit Suisse, Pactual, Itau BBA, Goldman Sachs, Santander and Bradesco BBI led the deal.

Multiplus, the miles program for TAM, has priced an IPO well below the bottom of the range amid substantial turbulence. “The IPO market is not as simple today as some people would think,” says a banker on the deal, downplaying the fact that the deal priced at 24% below the BRL21.00 midpoint and 11% under the bottom of a wide BRL18.00-BRL24.00 targeted range. The deal’s 39.3m shares priced at BRL16.00, resulting in proceeds of BRL629m. A 15% shoe will be exercised, bringing total proceeds to BRL724m. A 5.9m share hot issue was not exercised, say executives on the trade. Had the company issued all of the units at the midpoint, total proceeds would have been BRL1.1bn. A US-based investor who had expressed interest said that on the day before pricing, most of the interest in Multiplus was at the lower part of the range. BTG Pactual and Credit Suisse led the deal, the year’s second IPO. Aliansce, the first, priced 22% below its targeted midpoint. Investors remain picky and markets are have lacked conviction in the past week, making for challenging conditions to float new equity. Two other follow-ons have already been pulled this year, namely Metalfrio and M. Dias Branco. Today, Brazilian homebuilder PDG Realty is scheduled to price a BRL1.7bn follow-on. Investors say priority investors and Vinci, the fund that has committed to purchase a part of the offering, already account for a full book. Other buyers are expected to commit.

Brazil’s Multiplus is scheduled to price its IPO today after the close. The book is heard already 75% filled at the lower half of the BRL18.00-BRL24.00 range, according to one investor who says he is interested in participating. If all of the base offering shares and optional units are priced at the midpoint, the deal could be worth BRL1.25bn. The buysider says he expects the deal to generate substantial interest, albeit potentially below the midpoint, and should result in a handy sum of proceeds for selling shareholder TAM. TAM, meanwhile, is rumored to be eyeing a stake in Chile’s LAN. Chile’s new president Pinera is heard divesting his 26% share and TAM is rumored to be seeking a third of that piece, equivalent to roughly 8% of the company. BTG Pactual and Credit Suisse are leading Multiplus’ IPO, which will provide an important data point for other IPO hopefuls.

Brazilian mall operator Aliansce succeeded in pricing its IPO Wednesday evening, though at a price well below what it originally sought. However, the deal is viewed as more of a success than a flop by both bankers and investors. “I liked this deal,” says an investor, who nonetheless declined to participate and says he will watch how it trades in the secondary. At BRL9.00 per share price Aliansce weighed in some 22% below the targeted midpoint of BRL11.50. Still, says the buysider, the EV/Ebitda ratio of around 11x 2011 earnings is in line with BR Malls and Multiplan’s multiples, and slightly below the 13x Iguatemi is trading at. The deal apparently struggled to price and had only 75% of its book filled by early Wednesday, according to an investor watching the process. A small group of committed investors helped maintain a bid, he adds. At BRL9.00, deal proceeds add up to BRL673m, including the sale of 24.8m secondary shares and 50.0m primary units. If it had priced at the midpoint of the targeted BRL10.00-BRL13.00 range, total proceeds including a hot issue and greenshoe, would have added up to BRL1bn. The deal’s leads have 30 days to exercise a greenshoe for 9.75m shares. The IPO was led by BTG Pactual, Itau BBA, JPMorgan and Bradesco BBI.

Aliansce is set to price an IPO today, marking the first new equity deal of the year and the end of a drawn out filing period for the Brazilian shopping mall manager, which first resubmitted plans to issue last September. The company had initially hoped to issue in 2007 to raise around BRL330m. Today’s offer could generate around BRL1bn if done at the midpoint of the BRL10.00-BRL13.00 range, and all of the greenshoe and hot issue shares are placed. Itau BBA, BTG Pactual, JPMorgan and Bradesco BBI are leading the trade, with pricing expected late Wednesday.

Brazilian exchange BM&FBovespa has named Cathryn Lyall as director of its London subsidiary, which was inaugurated in November. Lyall was previously COO of exchange products at Icap, a London-based brokerage, and MD of EMEA at the Chicago Board of Trade. She will be responsible for establishing regulatory relationships, education and training, as well as business development targeted at potential customers in the EMEA region. She reports to Joao Lauro Amaral, head of international business at BM&FBovespa.

The second and third weeks of January have seen a slew of new equity filings for IPOs and follow-ons (FO), as well as updates to filings made in the final weeks of December. The flow, which until last week included 5 IPOs and 4 follow-ons, is indicative of a strong conviction on the part of issuers, say bankers. However, as of Thursday, 2 companies planning follow-ons appeared poised to pull out. Metalfrio, the commercial refrigerator and freezer maker, was heard close to pulling plans to raise around BRL370m in a follow-on scheduled for January 28. Bankers away from the deal suggest investor interest may be cool, though there is also the possibility of parallel M&A discussions. Metalfrio, which hired Credit Suisse, Itau and Morgan Stanley to lead the FO, has not filed a statement on plans to alter the course of the deal, scheduled to price January 28. M. Dias Branco meanwhile filed a statement saying its controlling shareholder, whose shares account for most of the planned secondary offer, suspended the sale, scheduled for February 4. It cites market conditions and timing as the reason. The Bovespa dropped around 4% last week to 66,220 and is down around the same amount since the start of the year after spending some of January above 70,000. Executives close to the process say the move is based on a decision to issue at a better multiple after having further grown the company during the first part of 2010. M. Dias Branco is looking to achieve a Novo Mercado listing by October 2010 and will likely return to market by then, say executives close to the process. Itau BBA and BofA-Merrill were slated to lead.

Renova, the Brazilian clean energy producer, has filed for an IPO on the Bovespa more than a year after it pulled its initial attempt, blaming market conditions. The company, which specializes in thermoelectric and wind power, recently won rights to develop several MWs of wind energy that were auctioned by the government in December. The company is understood to be seeking fresh capital for the projects, according to an executive familiar with its plans. Renova has not yet posted a prospectus or indicated timing on for the offering. Its first attempt at an IPO in 2008 was slated to be led by UBS Pactual and Morgan Stanley. The forthcoming deal is being led by Santander, BofA-Merrill and Itau BBA.

Multiplus, the frequent flyer and customer loyalty program for Brazil’s top airline TAM, is poised to raise as much as BRL1.12bn in its IPO, which is scheduled for March 2. In an updated prospectus filed this week, the company says it plans to IPO at a midpoint price of BRL21.00. It is selling 39.3m shares, which represents 25% of the company’s equity capital, plus an additional 5.9m share hot issue and a 2.9m share greenshoe, conditions permitting. The BRL18.00-BRL24.00 price range is wide, and likely designed to give underwriters ample wiggle room to tweak the price close to the time of issuance. By early March, at least 4 other follow-ons and 1 IPO will have priced, giving the issuer and its bankers a better sense of where market appetite lies and how its story is being received by the buyside. Multiplus is being led by BTG Pactual and Credit Suisse.