Category: Equity

Shares in Mexican cement giant Cemex sank Friday following the announcement that Chavez is nationalizing the cement industry in Venezuela, where Cemex has significant presence. Cemex’s ADR traded at $26.32 late Friday afternoon, down 4.22% from Thursday’s close of $27.48. On the Bolsa, Cemex was trading late afternoon at MXP27.81, down 3.94%. The Mexican IPC index was meanwhile off just 0.46%. The Venezuelan president says that he will pay “whatever it takes” to gain control of the cement industry in the country, according to press reports. Cemex was expecting for clarification from the Venezuelan authorities Friday. “We have not been informed of this by the Venezuelan government,” says a Cemex spokesman. “Given that, we are asking for an explanation.” The government blames cement companies for the domestic housing crisis, accusing them of exporting rather than supplying the domestic market, notes Goldman Sachs. The shop adds that the government has also in the past made threatening remarks about the steel and banking industries.

In a year where the thin trickle of ECM flow has been characterized by exceptional cases rather than the usual IPO and follow-on issuers, Citi, which finished in fourth place in 2007, is leading the ECM league tables with three deals and 30.16% of the underwritten deal volume, according to Dealogic. While that dominance is not expected to last very long, it indicates the shop has been busy printing deals to address a gaping hole in its 2007 LatAm franchise. Citi helped bring GP Investments’ $213m follow-on in February alongside Credit Suisse. It then underwrote its parent company’s divestiture of a stake in Brazil’s Redecard in mid-March, while its co-investors in the company chose not to sell. At $724m, that secondary offering is the largest deal to date. And a week later Citi helped Cresud raise $289m in a local rights offering in Argentina. Citi is also slated as co-lead on a $533m deal for Hypermarcas, alongside Merrill. “I don’t think they’ll still be there at the end of the first half,” says an ECM banker at a competing shop. “It’s all a question of when the market comes back,” he adds, noting once that happens, the usual suspects should regain their lead. Last year Credit Suisse and UBS Pactual led the charge by a wide margin, collecting 25% and 18% of the ECM fee pool respectively, according to Dealogic. But it may be awhile before those two regain their 2007 lead positions. A $2bn Gerdau offering scheduled for the last week of April should place JPMorgan and Itau, two other outliers, firmly at the top, with $1bn each in underwriting volume.

Cosan has asked the CVM to approve postponement of a planned share exchange to May 12 due to poor market conditions. The purpose of the transaction is to have holders of Cosan SA, the Bovespa-listed entity that went public in 2005, migrate to Cosan Ltd., the newer NYSE-listed entity whose voting stock is largely held by the company’s founder Rubens Ometto Mello. Investors have until May 2 to choose to adhere or not to the exchange offer. Cosan says in a statement that its shareholders requested a postponement due to volatility in the markets.

The Venezuelan government has reached an agreement with global hedge fund management group Renaissance Technologies to purchase 3.5m American Depositary Shares of quasi-sovereign Venezuelan telecom holding Cantv. The shares were valued at $11.27, according to the Venezuela state news agency, making the stake worth close to $40m. Terms of the transaction were not disclosed. According to the news agency, Venezuela is looking to purchase the remaining stocks outstanding. Trading of Cantv shares was suspended Tuesday on the local market to inform traders and stock holders of the purchase. Each ADS represents 7 class D shares of Cantv common stock, the Caracas exchange states. Renaissance manages $30bn in assets, according to its website. With this purchase, the Venezuelan government now controls 90% of the telecom, according to press reports.

Brazil’s Hypermarcas expects to raise BRL733.9m-BRL877m through a local IPO, based on a price range of BRL20.50-BRL24.50. The company’s 35.8m shares are set to begin trading April 18. Proceeds will fund new acquisitions, new product development, and working capital. Citi and Merrill Lynch are managing the operation, with UBS Pactual as co-manger. The owner of several brands of food, cleaning, hygiene and medication products had filed for an IPO last year, but pulled the plug when it opted to sell a 25% stake to a group of Mexican investors for $250m.

Brazilian Insurance Provider Porto Seguro has approved a 2-for-1 share split. The split is effective March 29, and brings the total shares to 230.6m. Shares closed Friday at BRL53.20.

Shares in the Bovespa and the BM&F surged on news of their merger Wednesday. Investors showed enthusiasm for the expected synergies and a strong growth outlook for both entities. “The BM&F has grown at higher rates than similar exchanges in other markets while the Bovespa’s growth has been not only higher than that seen in other countries, but at comparable levels to the growth rates of derivatives exchanges,” says Gilberto Mifano, the Bovespa’s CEO. A new holding company, provisionally called Bolsa Nova, will buy all the shares in both exchanges and issue new ones that will result in a 50-50 ownership. Bovespa holders will also get a cash payout of BRL1.24bn reais to adjust for the different shares outstanding in each company. Itau estimates goodwill of BRL16.4bn, which can be amortized over 6 years. The deal still needs to be approved by the CVM, the Central Bank, Brazil’s antitrust regulator and each side’s board and shareholders. A shareholder vote is expected for the week of April 7, say company officials, with a full conclusion to the voting process taking place by the end of April. A share swap, however, will only be done once a union is agreed.

Panama’s BG Financial Group, the holding company for Banco General, has requested authorization to register common shares on the local stock exchange. No date or schedule for an IPO was included. The group was formed last year through the merger of Grupo Financiero Continental with Banco General Financial, and its shareholders are Empresa General de Inversiones (61%) and Grupo Financiero Continental (39%).

In the March 18 brief titled “Credit Suisse ECM Head Jumps to Merrill” we incorrectly stated the date of Sebastien Chatel’s departure from UBS. He left the firm in March of 2007.

Credit Suisse will likely replace Sabastien Chatel, its departing head of ECM, in the coming several weeks, according to officials at the firm. Internal executives and outside candidates will be considered for the role, they say. Chatel is leaving Credit Suisse to co-head LatAm ECM at Merrill Lynch after having spent under a year at the former. While Credit Suisse executives downplayed Chatel’s departure, emphasizing his short time at the helm of the regional franchise and CS’s dominance prior to his arrival, the shop is heard to have considered matching Chatel’s Merrill offer to keep him. Still, the consensus remains that Credit Suisse’s ECM platform is a solid, multi-tiered effort that relies on strong regional relationships for its business. One departure is unlikely to derail that momentum. But an externally driven market downturn like the one LatAm is experiencing today is sure to shrink ECM revenues, and the shops with the biggest dedicated staffs might be the first to feel the pinch.