Category: Equity

Goldman Sachs is expected to take a lead role in the upcoming IPO of the Bovespa, Brazil’s stock exchange. It will have joint books with Credit Suisse, according to a banker away from the deal. Goldman is ramping up in Brazil and previously had joint books on Banco Daycoval, as well as Cosan, which was widely criticized. A Goldman spokesman declined to comment on the Bovespa mandate.

Now that LatAm equity markets have bounced, Citi sees volatility setting in, but its top pick is still Brazil. “We retain our mid-2008 Bovespa target of 70,000, but we are raising our end-2007 target from 54,000 to 57,000,” says Citi. The Bovespa closed Monday at 54,340. Within Brazil, Citi raises industrials to overweight from neutral and goes further underweight in energy. It remains overweight in materials, financials and utilities. Citi also says it is replacing Aracruz on its focus list with CSN; while adding beef producer JBS. Elsewhere, the shop is neutral Mexico, which it sees as highly vulnerable short term to further weakness in the US and Mexican economies. It also has Peru at neutral and Chile underweight. “We believe the bull market is intact and volatility will subside,” the shop concludes. LatAm equity markets have jumped 15% in just seven days from the August 16 low, according to Citi.

Soybean producer Imcopa Importação e Exportação Indústria de Óleos has filed for an IPO on the Bovespa, according to filings with the CVM. UBS Pactual will lead the offering, with HSBC as joint lead. São Paulo-based Banco Panamericano is planning an offering, also to be led by UBS Pactual. Panamericano would be the latest of a slew of mid-cap banks to tap the equity markets this year. Some local investors are saying they’ve already maxed out their portfolios’ allocation to banking and real estate stocks.

LDC Bioenergia, the Brazilian subsidiary of French commodities group Louis Dreyfus, has filed with regulators for an IPO on the Bovespa. The São Paulo-based company, which operates seven mills in Brazil and is building an eighth, is executing a BRL1.4bn investment plan. Proceeds from the offering could be invested to expand the group’s mills, construct new plants or acquire other sugar and ethanol producers, LDC said in its filing. JPMorgan and Itaú BBA will lead the offering.

Shares of Brazilian miner CVRD rose 3.5% to BRL42.90 Thursday, following rumors that is in discussions with BHP Billiton about making a joint bid for fellow miner Rio Tinto. CVRD’s ADRs closed up 3.87%, at $52.08. A deal, which would be the biggest in the sector’s history, would likely face both credit and regulatory hurdles. After buying Inco last year for $18bn, a link with BHP and Rio would propel the Brazilian firm to the top of the global commodities business. A CVRD spokeswoman declined to comment.

HSBC has named Jim Rossman, former head of ECM for the Americas, to lead the global investment banking group’s LatAm unit. Rossman’s title is a new one for the shop, which is better known for its retail presence. Rossman tells LatinFinance he will oversee investment banking and ECM, project finance, and commercial lending for the region, which includes Mexico, Argentina, Chile, Brazil, Colombia and Panama. He reports to Anthony McCarthy, head of LatAm corporate and investment banking and markets. DCM and syndicated loans for the region, currently under the markets group, is headed by Gerardo Mato, who also oversees DCM for the Americas, including the US and Canada, and the recently formed liability solutions group, which includes derivatives and treasury products. David Noble, formerly in charge of ECM origination in the Americas, is now head of ECM for the US, Canada and LatAm. Among the next steps for HSBC’s investment banking effort is to build up an M&A team, and to add on high-margin businesses like leveraged finance to take advantage of its balance sheet.

Agrenco Limited, a Brazilian integrated agriculture company, Wednesday applied for a Bovespa listing of securities with the CVM. Agrenco’s parent company, Agrenco Group, is headquartered in the Netherlands. Earlier this year it said it would invest $100m in biodiesel plant joint-ventures. Agrenco Limited is headquartered in São Paulo. Credit Suisse is leading.

No fewer than five non-Brazilian companies have filed to list their shares on the Bovespa since the start of August. That’s compared to eight in the rest of 2007, and three in 2006. In August, Campos Verdes, Sul América, Sistema Nacional Brasileiro de Educação, Laep and Brazilian Finance & Real Estate all put in papers for BDR deals. Brazil’s market is becoming a regional hub for non Brazilians looking to tap into the country’s liquid market, such as Argentina’s Banco Patagonia. For Brazilian businesses that want to incorporate offshore in places like Bermuda, such as Tarpon Investments, GP Investments and Cosan, but keep their liquidity in the country, it is also attractive.

Brazil’s market regulator, the CVM, halted the IPO procedures for Laep Investments, a Bermuda-based private equity firm run by Brazilian executives, for 15 days because of remarks the executives made to local papers Valor Econômico and Folha de São Paulo last week. In a letter posted its website, the CVM cites quotations by Marcus Elias, president of the board of Parmalat Brasil, Laep’s most significant portfolio company, and João Audi, president of the same company, that explain parts of the company’s restructuring strategy and highlight its strong points with remarks that can very easily be construed as forward looking statements. In order to allow the information to filter through the market, says the CVM, it has suspended the procedure for 15 days, and the process will continue September 14. UBS Pactual is leading the deal, which will include BDRs.

Brazilian homebuilder Gafisa has joined the Bovespa and IBrX-50 stock market indexes, in the most recent rebalancing. Its weighting in the Bovespa will be 0.66%, placing it 48th in the portfolio. Gafisa is one of the largest Brazilian homebuilders, and in March became the first with shares listed on NYSE.