Category: Equity

Brazilian credit card provider VisaNet is close to filing its second attempt at an IPO, and market participants believe this time it will fly. The offering, tentatively slated for June, could raise BRL5bn-BRL7bn depending on investor appetite, says a banker familiar with the process. Exact details on pricing and timing are still a way off, and a CVM filing is pending. VisaNet is controlled by Bradesco (39%), Banco do Brasil (32%), Santander via Banco Real (32%) and Visa International (10%). All 3 banks will be bookrunners, with 2 spearheading the effort as global coordinators, says a banker on the deal. JPMorgan also joins the lead group, as a Visa relationship bank. Goldman Sachs and UBS Pactual, which was bought recently by BTG, are also rumored to be joining the lineup of bookrunners, though without a global coordinator title. The line up remains to be finalized. VisaNet filed an IPO in September – with all of the same banks, excluding UBS Pactual – but passed on a deal as markets tanked. In general, equity investors are looking for a large and liquid name. Like Redecard, VisaNet has the scale to deliver that. “Ideal candidates for an IPO are those that are large, with strong revenues and a liquid free float,” says Rogerio Poppe, equities portfolio manager at BNY Mellon Arx. He adds that issuance size needs to exceed BRL1bn per deal to be palatable for investors. Poppe thinks VisaNet is among companies that can place shares even when markets are unwelcoming. Rio-based BNY Mellon Arx manages over BRL5bn.

After the swine flu outbreak caused Mexico’s IPC index to tumble 4% Monday, the markets appear to have found support. Tuesday’s session saw the bolsa decline 0.8% to close at 21,662.53, while MXP depreciation was also contained. The currency weakened 4.0% Monday, but Tuesday’s session saw it slide just 0.8% to end at MXP13.87 to the dollar. “We expect increased volatility in the short term for Mexican assets on the back of the swine flu, especially for the peso, but we do not expect anything along the lines of a free-fall in the Mexican peso,” says Bulltick. Fed lines, an IMF FCL and central bank CB commitment to a stable peso will keep it from depreciating back to MXP15, the shop adds. “If the epidemic is only temporary, investors can expect spreads to tighten back in and the peso to return to MXP13.3/USD in the short-term and MXP12.50/USD by the end of the year,” says Bulltick.

Arminio Fraga, a founding partner of Gavea Investimentos, has been elected chairman of BM&F-Bovespa’s board of directors, the exchange says. He replaces Gilberto Mifano, who held the post since May 2008, following the merger of the two exchanges in March of the same year. Fraga will not leave Gavea and remains fully committed to his role in running the Rio-based asset manager. “I’ve left other board positions at companies and NGOs to focus more on this role,” Fraga tells LatinFinance. Fraga, who will be an independent board member at the BM&F, has held board positions at other companies such as Unibanco, Bunge and JPMorgan. The former central banker says he chose the BM&F partly because it provides an opportunity to do an important public service. “It’s important [for Brazil] to have a strong exchange that fulfills its role in developing the capital markets,” he says. Gavea is heard to have recently sold its stake in the exchange because of Fraga’s move. The new BM&F-Bovespa board has 11 members. Fraga has a 2-year mandate, which can be extended for another 2 years. The other directors elected to the board are: Candido Bracher, Claudio Luiz da Silva Haddad, Craig Steven Donohue, Fabio de Oliveira Barbosa, Jose Roberto Mendonça de Barros, Julio de Siqueira Carvalho de Araujo, Luiz Stuhlberger, Marcelo Fernandez Trindade, Renato Diniz Junqueira and Rene Marc Kern.

The swine flu has hammered Mexican markets on the first full day of trading since the severity of the outbreak rose dramatically over the weekend. The Bolsa’s IPC dropped 3.3% on Monday to 21,827.11, while the MXP slid 4.0% to MXP13.76 per dollar. Research shops say it is still too early to quantify the potential economic consequences of the potential pandemic, though any sense of stability achieved by the early April announcement of an FCL arrangement with IMF has been undeniably toppled. If the outbreak results in a temporary, one-off event causing 2-3 weeks of disruption “investors can expect spreads to tighten back in and the MXP to return to MXP13.3 per dollar in the short-term, and MXP12.50 per dollar by the end of the year,” says Bulltick Capital in a Monday note. If the outbreak turns into a pandemic, Mexico’s economy would be severely affected as consumers cut spending and tourists cancel their vacations, it adds.

While the equity new issue market has been firmly shut for IPOs, TGI, the Colombian gas transportation company, is still working hard to be ready to issue once they reopen, according to its CFO. “We still plan on capitalizing TGI,” says Jorge Pinzon Barragan, CFO, tells LatinFinance. “We may put an RFP out by the end of the first half,” he adds, noting no banks have been selected even on a preliminary basis for advisory and underwriting. One of the big challenges for TGI, which is controlled by EEB, has been moving its accounting over to IFRS. In September 2007 TGI issued $750m in 10-year bonds that priced at par to yield 9.50%. Its parent EEB followed a month later with a $610m 2014 NC4 note 8.75%. Both deals came via ABN AMRO, now RBS. Pinzon says TGI’s debt to equity ratio stands at 1.5x.

The Mexico Fund, a closed-end vehicle focused on the Mexican Stock Exchange, says it has received offers from holders of 36.45% of its shares in a buyback that was capped at 5.00% of the float. Under terms of the offer, the fund offered to repurchase up to 5.00% of common stock at 98.00% of net asset value. The repurchase price date is April 16 and owing to the response, the Mexico Fund will buy back on a pro-rata basis. “The pro-rata portion of the fund’s portfolio securities will be transferred to participating stockholders’ Mexican accounts on or before April 23,” says the fund. The repurchase offer was not part of a plan to liquidate the fund and stockholder participation was not mandatory, it adds. The fund, which has 18.1m outstanding common shares, provides a vehicle to investors who wish to invest in Mexican companies through a managed non-diversified portfolio.

Colombia’s ISA has sold COP210bn ($86m) in floating-rate bonds locally. The transmission company priced COP150bn in 2015 bonds at the IPC inflation rate plus 4.99%, and COP59.5bn in 2018s at IPC plus 5.90%. It will use proceeds to refinance debt and for general corporate purposes. Bancolombia, Correval and Citi and managed the sale. The company had expected to raise $80m-$100m equivalent. The AAA rated transaction was ISA’s first local tap since December, when it sold COP104.5bn in reopened 2026 bonds.

The Colombian unit of Santander has placed COP132bn ($53m) in subordinated local bonds. The issue was divided into tranches of 7-year bonds paying a 10.84% fixed rate and IPC plus 6.35%, and a 10-year priced at a fixed rate of 10.79% and IPC plus 6.50%. The bank describes demand for the issue as exceeding the offered amount, but does not say by how much. Proceeds will go towards working capital. Santander’s own capital markets unit is managing the sale, rated AA+ on a national scale.

A 27% drop in the IPC from January 1-March 9 and a currency that has weakened 11.5% in the same period make Mexico an attractive place for equity bargains, according to UBS Pactual. The shop says absolute and relative valuations, including trailing and forward earnings and book value, are moving in the country’s favor. The fact that many of the largest listed entities are less cyclical in nature than Brazil’s and fall under the defensive stocks category also bolsters the case for Mexico, it says. However, analysts see returns in the medium term only, with the short-term view remaining “negative and worrisome.” UBS simultaneously cut Brazil to neutral from buy on the assumption that a forthcoming recession has not been fully priced into some of the biggest equity names. Ironically, however, UBS’s top 10 picks include just two Mexican names – America Movil and Televisa – while 6, including Cemig, Vale, AES Tiete, JBS, Itau and NET, come from Brazil. In the Andean and Southern Cone regions, only two stocks stand out for UBS: Chile’s CCU and Santander.