Category: Equity

Brazilian real estate company Construtora Tenda plans to raise as much as BRL804m through a Bovespa IPO. The 67m shares are expected to begin trading October 15 at between BRL9 and BRL12. Banco Itaú and Credit Suisse will lead, with HSBC and Banco Modal as co-managers.

Infrastructure companies will send Brazil IPO volume to a record level in 2008, Pedro Guimarães, a director at UBS Pactual in Brazil, tells LatinFinance. “These are companies whose revenues equal billions of dollars,” Guimarães says. “Each infrastructure IPO will equal that of 20 smaller companies,” he adds. Firms in sectors such as oil, petrochemicals, construction, heavy transportation and electric energy needing long-term funding will be responsible for surging IPO levels next year, he remarks. Large construction names in Brazil include Odebrecht and Camago Correa. Guimarães adds: “To make up for all this demand for infrastructure from the government and private companies, constructors will have to tap the equity or debt markets. That’s for sure.” Primary and secondary stock offerings in Brazil have totaled BRL40.73bn thus far in 2007, up from BRL26.98bn in the whole of 2006, according to CVM. Another trend due in Brazil is additional offerings from companies whose IPOs took place in 2006 and 2007, as they seek to grow and buy other firms.

Chilean construction firm Socovesa is hitting the road Friday for the local leg of its $150m IPO through IM Trust. Deutsche Bank has been hired for the international portion of the IPO, which aims to sell 25% of the company overall. The amounts placed in each will be determined by demand and it should price in the next three weeks, IM Trust executive director Guillermo Tagle tells LatinFinance. The shop is also lining up a $64m local rights offering of 1.79m shares at CLP18,500 each for Clinica Las Condes, which should come by the end of November. Also coming to market later this year is AquaChile, a salmon producer, heard to be preparing a local and international offering of up to $250m.

Colombia’s state-owned Ecopetrol has received orders for more than $3bn equivalent in pesos during the local round of its IPO, far surpassing estimates made in August by bankers and local brokers. Forecasts were for local demand to hit $1bn maximum. As of Tuesday afternoon, at least COP6trn worth of orders had been submitted, from 320,000 investors. At that level, the domestic issue would consume the minimum 10% of the $25bn company that was initially being offered. “People have sold other stocks to buy Ecopetrol,” Ricardo Duran, head of research at Corredores Associados, a local brokerage, tells LatinFinance. “The expectation is that Ecopetrol will find more oil in the future,” he adds. Vision de Valores, another local brokerage, has a year-end target of COP17,000 which represents a 20% rise over the COP14,000 offer price. Bancolombia is leading the operation, though shares are being sold at all of the major brokerages and even at supermarkets around the country. The book was set to close overnight.

Brazil’s Banco Industrial e Comercial plans to raise BRL683-BRL900m through a Bovespa IPO. The 62.12m share issue is expected to begin trading October 15, at BRL11-BRL14.50 per share. UBS Pactual will lead, with Bradesco, Banco Fator and HSBC as joint leads. The mid-sized private bank would become the 10th Brazilian financial institution to sell shares so far this year. Proceeds will be used to finance domestic credit portfolios, add to cash reserves and expand Bicbanco’s retail capacity.

Brazilian lumber provider Satipel Industrial has priced a BRL398m IPO, the country’s first since July, at BRL13.00, the low end of a BRL13-17 range given in the initial filing. Leads Credit Suisse, UBS Pactual, and Unibanco earned fees of 3%, totaling BRL12m. Co-manager was Banco Safra.

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.