Category: Equity

Santander Brazil is poised to raise up to BRL15.6bn in its IPO today. The bank is offering 525m shares, an amount that can be increased by 75m in greenshoe shares and 25m in hot issue shares. Pricing is slated to fall somewhere between BRL22.00-BRL25.00. If it prices the deal at the BRL23.50 midpoint of the range, Santander would raise BRL14.7bn. US-based investors say the order book for the deal is heard subscribed by more than 5x, which indicates the issuer may have a comfortable margin to price near or at the top of the range. Bankers off the deal and investors concur, saying they expect pricing to come somewhere in the top half of the deal, but don’t expect the price to rise above the stated range. One investor is hopeful for a pop in the share price Wednesday, when they begin to trade, given the strong demand and the fact the bank and its investment banks will be focused on ensuring investors do well in the offering. Executives involved in the trade say that if Santander prices its offering at the midpoint of the range, its valuation on a 2010 P/E ratio would stand at a discount of 13% to Bradesco’s in the comparable period. If the offering is priced at the top of the range, Santander’s PE would be higher than Bradesco’s, adds an investor on the deal. On a P/B basis, a midpoint pricing suggests a 19% discount to Bradesco and a 30% discount to Itau Unibanco, using 2009 figures, note sellsiders. The deal is being led by Santander, Credit Suisse, BofA Merrill and BTG Pactual.

Aliansce Shopping Centers, a Brazilian mall operator, has refiled plans to go public. The company pulled its planned $330m IPO in 2007 as market conditions for smaller issuers deteriorated. Credit Suisse and UBS Pactual were slated to lead that trade. BofA Merrill are heard leading the new transaction.

Tivit, the Brazilian IT outsourcer which brought LatAm’s first midcap IPO in more than a year, has failed to impress investors, setting an initially discouraging precedent for the region’s medium-sized IPO hopefuls. In its first four trading sessions, the stock has slid 13%, and may be poised for a bigger drop in the coming days once the deal’s underwriters run out of greenshoe shares to support the trade in the secondary. Several midcap issuers are heard hoping for a window, but investor interest appears tepid. Direcional, a homebuilder that filed for an offering a month ago, has yet to launch its issuance procedures, suggesting it may be considering pulling the deal, say bankers away from the process. Credit Suisse led Tivit’s IPO, which consisted of 38m shares priced at BRL15.00, a discount of 19% to the midpoint of the proposed pricing range.

Brazilian homebuilder Brookfield Incorporacoes says it received proceeds of BRL100m from the placement of a 2013 debenture that pays IPCA plus 10.25%. The sale was approved Tuesday and placed in the same day with local funds by underwriter BTG Pactual. The notes amortize in two portions, starting in month 36 of the 4-year deal, and again in month 48. Fitch rates Brookfield A+ on a national scale. The company is also en-route to the equity markets, with an equity offering scheduled for October 20 via Itau BBA, Credit Suisse, BTG Pactual and Bradesco BBI. The offering is set to include 85m shares plus a greenshoe, which could bring the total number of share to 98m. At the company’s Tuesday closing price of BRL7.80, gross proceeds could reach BRL762m.

JPMorgan leads the LatAm rankings, according to Dealogic, but a looming jumbo Venezuela sovereign bond and Santander Brazil’s mega-IPO appear set to topple the US bank. For the year to September 25, JPMorgan had booked $6.2bn in proceeds from 16 deals, some 11% of the market. In second place is HSBC with $5.5bn from 27 deals, while third is Citi ($5.0bn from 39 deals). Unusually for DCM, where those claiming most volume often work for less, JPMorgan also bags the biggest wallet share, Dealogic data – which include local market transactions – show. The bank has racked up $32.8m, or 16.2% share of DCM fees. In second place is Citi ($17.3m, 8.5%) and third is Santander ($14.4m, 7.1%). However, this week’s $3bn Venezuela sovereign trade should propel Citi to the top of the volume charts and put Deutsche Bank back in the top 10, at least by proceeds. The joint leads are expected to bring the jumbo sovereign in 10 and 15-year tranches this week, pushing JPMorgan down to second position. JPMorgan meanwhile still heads the ranking for LatAm M&A and ECM volume in the year to September 25. However, it also looks likely to be dislodged from equity pole position by next week’s BRL13bn IPO for Santander, which is led by Santander and Credit Suisse. For overall fees, including M&A, DCM, ECM and loans, JPMorgan is top with $117.4m, or 14.1% market share through September 25. Next is Bradesco, ($86.4m, 10.4%), which is coasting on senior participation in VisaNet’s blowout $4.26bn June IPO, according to Dealogic.

A September 25 Daily Brief entitled “Midcap IPO Comes up Short” incorrectly identifies the midpoint of the Tivit pricing range. It is BRL18.50, not BRL16.50.

Brazilian IT outsourcer Tivit succeeded in pricing its long anticipated IPO late Thursday, but at BRL570m, the mid-cap test fell short of the issuer’s initial expectations. The company priced all of the 38m shares it sought to place at BRL15.00, a 19% discount to the originally proposed BRL16.50 midpoint, and a 27% discount to the top of the proposed range of BRL20.50. At BRL20.50, gross proceeds would have added up to BRL779m. “It’s a difficult one to value because there are not a lot of obvious comps,” says a banker away from the deal. An investor looking at it says the book was heard not even fully subscribed on the afternoon of pricing, though the fact the transaction got done suggests it was eventually filled at the lower level investors were presumably demanding. Tivit is the first midsize company to do an IPO in Brazil this year, and its deal is a test of the prospects for smaller issuers. Direcional Engenharia, a homebuilder, is the next medium sized issuer in the IPO pipeline. Tivit was led by Credit Suisse, with Morgan Stanley and Bradesco as joint leads.