Category: Equity

Phones were ringing off the hook Monday at Bogota’s major brokerages as local investors called in with orders for blocks of shares to be offered in Ecopetrol’s $2.7bn equivalent IPO. The largest ever equity offering from Colombia – in its most important corporate name – has been in the works for months, with repeated calls from President Uribe for Colombians to participate in what he calls the democratization of the country’s crown jewel. But on the opening day of the offering, which will take place in three rounds – two local, one international – some local dealers said COP1,400 a share was too high. For Nelson Fernando Espinosa, of Visión de Valores, which estimates fair value based on price to EBITDA at COP1,206, the stock is still a buy, but not such an exciting one. “We’re losing some major upside in the stock by buying it at COP1,400,” he tells LatinFinance. Others, however, believe the price is right. Corredores Associados, a local brokerage, bases its estimate on price to book value and price earnings ratios at comparable E&P companies around the globe, which come in at slightly higher levels than Ecopetrol. “We originally had the price at COP950-COP1,050, but adjusted that view when the underwriters released additional information,” says Raul Pacheco, an analyst at Corredores, referring to the company’s plans for expansion and new businesses. The first round, for locals associated with Ecopetrol exclusively, will conclude September 25.

Laep Investments, a Bermuda-based private equity turnaround shop that owns 98.5% of Parmalat Brasil, is planning to list on the Bovespa, according to a filing with the CVM. Run by a group of Brazilians, the two most senior of which are Marcus Alberto Elias and Eduardo Aguinaga de Moraes, founders of TCW/Latin America Private Equity Partners, Laep took control of Parmalat in 2006 during its in-court restructuring. It established new ownership structures to maintain the dairy producer’s operations and relations with its producers and providers. Details on the amount of the capital raise and number of shares are unclear. UBS Pactual will lead the Laep deal, which will be offered offshore and as BDRs locally.

Shares in Norsemont Mining, the Canadian exploration company, started trading this week on the Bolsa de Valores de Lima following a listing sponsored by Credibolsa. The share was quoted at PES1.31 in zero volume Tuesday and listed under “junior” stocks by the BVL. The Lima exchange is heavy on mining shares and has performed well over the last six years. Norsemont is involved in the Constancia copper-moly-silver project, which it expects to be in production as early as 2011.

Laep Investments, a Bermuda-based private equity turnaround shop that owns 98.5% of Parmalat Brasil, is planning to list on the Bovespa, according to a filing with the CVM. Run by a group of Brazilians, the two most senior of which are Marcus Alberto Elias and Eduardo Aguinaga de Moraes, founders of TCW/Latin America Private Equity Partners, Laep took control of Parmalat in 2006 during its in-court restructuring. It established new ownership structures to maintain the dairy producer’s operations and relations with its producers and providers. Details on the amount of the capital raise and number of shares are unclear. UBS Pactual will lead the Laep deal, which will be offered offshore and as BDRs locally.

Phones were ringing off the hook Monday at Bogota’s major brokerages as local investors called in with orders for blocks of shares to be offered in Ecopetrol’s $2.7bn equivalent IPO. The largest ever equity offering from Colombia – in its most important corporate name – has been in the works for months, with repeated calls from President Uribe for Colombians to participate in what he calls the democratization of the country’s crown jewel. But on the opening day of the offering, which will take place in three rounds – two local, one international – some local dealers said COP1,400 a share was too high. For Nelson Fernando Espinosa, of Visión de Valores, which estimates fair value based on price to EBITDA at COP1,206, the stock is still a buy, but not such an exciting one. “We’re losing some major upside in the stock by buying it at COP1,400,” he tells LatinFinance. Others, however, believe the price is right. Corredores Associados, a local brokerage, bases its estimate on price to book value and price earnings ratios at comparable E&P companies around the globe, which come in at slightly higher levels than Ecopetrol. “We originally had the price at COP950-COP1,050, but adjusted that view when the underwriters released additional information,” says Raul Pacheco, an analyst at Corredores, referring to the company’s plans for expansion and new businesses. The first round, for locals associated with Ecopetrol exclusively, will conclude September 25.

Brazil experienced strong inflows in foreign capital in July and August, despite market turmoil that resulted in a 17% drop in the Bovespa between July 16 and August 16. “Partial data through August 21 showed a $6.1bn surplus, despite external turbulence,” says JPMorgan. “Strong FDI and booming equity investment sustained a hefty capital account surplus last July,” it adds. In general, unwinding of local positions by foreigners has been contained and the market technicals are improving, adds the shop. Outflows totaled $800m in the same period, JPM adds.

Trisul, a São Paulo-based real estate developer, has filed to go public on the Bovespa via bookrunner Morgan Stanley and joint lead JPMorgan. The company, the product of a recent merger between Tricury and Incosul, has not released details on the size or number of shares. In the filing, the company states it has a BRL190m 25-year line of credit and BRL71m in outstanding construction-related loans from local banks with maturities ranging between 2008 and 2010.

Banco Industrial, a mid-market bank, has filed to go public on the Bovespa, via UBS Pactual with BBI as a co-lead. It will be the 10th bank to file this year. Others in the pipeline include Banco Fibra, which filed two weeks ago, and BicBanco, which is likely to be the next issuer from the sector. BicBanco will issue 62m shares, 42m of which will be primary shares at a yet undetermined price range. The average offer price for mid-market banks in Brazil this year has been BRL14.50, according to Dealogic, which would imply a potential raise of BRL900m for BicBanco, though no official price range has been released. UBS Pactual is leading, with BBI, Banco Fator and HSBC as co-leads. So far this year there have been seven mid-market bank IPOs in Brazil, according to Dealogic.

Argentine petrochemicals firm Petroquímica Comodoro Rivadavia (PCR) is considering an IPO in Argentina, Brazil, and possibly in other international markets. The company hopes to raise as much as ARP930m ($295m) and may also issue up to $250m in bonds. Last month, Banco Patagonia listed on the Merval, the Bovespa and New York, raising $260m. PCR’s plan is subject to shareholder approval, which is expected at the end of August. Last week, Argentina’s MercadoLibre , an online auction company, priced an IPO on the Nasdaq at $18, in one of the most volatile days on global equity markets since the aftermath of the terrorist attacks of 9/11. MercadoLibre saw its shares soar 58% in the aftermarket and has held steady off the highs.

SulAmérica, a Brazilian insurance provider 49% owned by ING, is close to filing IPO documents with the CVM, according to local bankers away from the deal. Unibanco is heard to have been tapped for the deal. SulAmérica would join a growing number of financial companies accessing Brazil’s public markets. A slew of mid-market banks, a giant credit card company, and two offshore asset managers have already gone public, with mixed results. In Brazil, consumer plays like credit cards and large retail banks have been among the strongest performers.