Category: Equity

Argentine electricity distributor Edenor raised $327m in its IPO of 15.2m ADSs and 81.2m Class B shares offered in Argentina. The international tranche priced at $17 a share, the middle of a $16-18 range, and raised $257.8m. The Argentine retail tranche priced at ARP2.62 a share to raise $69.1m, according to Dealogic. US institutions bought the bulk of the international offering, with one of the underwriters claiming institutional demand for the ADSs driving an oversubscription of four times. Edenor’s ADS had risen more than 5% by mid-afternoon Thursday. Edenor has 30 days to exercise a 15% over-allotment option. Citi and JPMorgan led the international piece and Raymond James Argentina handled sales locally.

Brazilian real estate and property development company AGRA Empreendimentos Imobiliarios raised $344m yesterday, Wednesday, after floating its stock on Bovespa. Shares in the IPO priced at 8.50 reais ($4.19), mid-way between initial guidance of 7 to 10 reais. Settlement is April 30. Credit Suisse was the sole bookrunner.

Following almost a dozen real estate IPOs, and with six mid-sized banks lined up to go public, Brazilian bankers are expecting a new wave of offers from the meat processing sector. In March, beef producer JBS Friboi raised $787m in an IPO and Marfrig, an integrated meat processing company, filed a registration on April 18. JPMorgan and UBS led JBS while Merrill Lynch has books on Marfrig. “There are about five companies in this sector that have a real chance of making it out this year,” says a head of local capital markets.

Argentine electricity distributor Edenor is set to price Thursday. Edenor plans to offer 15.2m ADSs on the New York Stock exchange through underwriters Citi and JP Morgan, with Raymond James handling sales in Argentina. The price range is $16-18. The offering is expected to raise $307m after a 15% over-allotment option.

Banco Daycoval, a mid-sized Brazilian bank, is close to filing an IPO with the local market regulator CVM. UBS-Pactual and Goldman are heard to be leading the offering. The São Paulo-based bank booked revenues of $218m in 2006, a 60% rise over 2005 sales. By the time Daycoval makes it to market, there will likely be five other mid-sized banks that will have gone public. The first mid-market financial institution to do an IPO in Brazil was Banco Pine, at the end of March. In the pipeline are Banco Cruzeiro do Sul, Banco Bonsucesso, Paraná Banco and Banco Sofisa, which prices tomorrow via UBS-Pactual.

A burst of IPOs and follow-ons is anticipated as companies rush to tap a market that is “hot and receptive to new issuers,” in the words of one LatAm ECM head at a global bank. The bulk of issues will come from Brazil, but there are also some rumblings from Mexico, Colombia, Chile and Peru. Sectors include infrastructure, financial services, meat packing and agribusiness. Four firms are set to raise over $1.2bn this week on the São Paulo Stock Exchange. Today, AGRA Empreendimentos Mobiliários, a real estate company, is looking to offer 79m shares at BRL7.00-10.00 via Credit Suisse to raise $330m. Wednesday, Banco Sofisa, a mid-tier bank, will look to raise $305m via UBS Pactual by selling 37m shares at BRL13.00-17.00. Thursday, Wilson Sons, a shipping company, is hoping to raise $297m by selling 25.3m shares at BRL10.00-13.50 via UBS Pactual and Credit Suisse. Also Thursday, Cremer, a textiles manufacturer is looking to raise $287m via the sale of 33.4m shares at BRL15.50-19.50 via Merrill and Credit Suisse. A follow on offering for Brazilian steel company Usiminas is set to price in Brazil the same day through underwriters Merrill and Credit Suisse. According to Dealogic, Brazilian firms have raised $6.61bn through 21 deals to date, compared to just two deals totaling $623m for Mexicans and one $193m follow-on for Argentina’s Pampa Holding. Peruvian miner Minera IRL raised $22m in its IPO on the LSE’s AIM in early April.

Brazilian state-run Banco do Brasil (BB) may take over the running of the Santa Catarina state bank (BESC), according to a statement issued by the federal bank. Shares in BESC took off on Friday, rising over 46% in trading on Bovespa, on news of the possible takeover.

Mexico’s Banco Compartamos is set to become the first Latin American microfinance institution to raise equity capital when it prices an IPO on the Mexican Bolsa today, Thursday. Carlos Danel, co-executive director at Compartamos tells LatinFinance that the offering of secondary shares will allow some shareholders to partially monetize their stakes in the bank. The offer, which comprises an international 144a Reg S tranche and a Mexican retail tranche, should price in the range of 30 to 40 pesos a share, and could raise as much as $400 million, according to a source close to the deal. Credit Suisse is global coordinator and bookrunner of the 144a Reg S tranche, pitched at qualified institutional buyers in the international market. Banamex and Banorte are handling sales to Mexican retail. Danel, who has been meeting with investors in Mexico, Brazil and Europe, says the price range has already been revised upwards from 28 to 35 pesos per share. An equity banker away from the deal says the price adjustment indicates pent up demand for a name in a sector and country that has scarcity appeal. Mexico has logged just one equity deal so far this year, a $217.17 million follow-on offering for steel manufacturer Grupo Simec, compared to Brazil’s 19 deals totaling $6.26 billion, according to Dealogic. This is the first equity offer for a Latin American microfinance institution, but not the first from emerging markets. Indonesia’s Bank Rakyat raised $480 million in equity in October 2003, through UBS and Bahana Securities.

There are just two equity deals on the block for this week, according to Dealogic, and April overall shows a Brazil real estate bias. A BRL346m ($170m) IPO for Brazil’s CR2 Empreendimentos Imobilarios should price Wednesday through Unibanco and the initial range is BRL20-25. The primary issue from the busy real estate sector pays 4.5% gross spread, according to Dealogic. Ultrapetrol of the Bahamas is scheduled Thursday to price a follow-on for up to $199m via UBS and Bear Stearns. The $173m issue has a greenshoe option. The tanker fleet owner was trading at $17.69 before the announcement. Jeffries, Raymond James and DVB are co-managers. On the docket for next week are AGRA Empreendimentos Imobilarios’ BRL582m IPO through Credit Suisse, marketed at BRL7-10, Cremer’s BRL508m IPO at BRL15.50-19.50 through Merrill and Credit Suisse and Wilson Sons’ $259m IPO at $10.00-13.50 via CS and UBS Pactual, according to Dealogic. All have a 15% greenshoe.

Moody’s has put the B1 rating of Brazil’s JBS-Friboi on review for upgrade. “The review of JBS’s B1 rating was prompted by the company’s decision to use part of the IPO proceeds for debt reduction, resulting in improved leverage indicators,” says Moody’s analyst Soummo Mukherjee. The review will primarily focus on JBS’s financial and growth strategy for the next few years. Promotion to Ba3 will largely depend on JBS’s ability to keep debt to EBITDA below 3.5x on a sustainable basis, and the prospects for the company’s free cash flow generation to be less negative than historically. JBS is the fourth largest beef company in the world in terms of cattle slaughtering capacity and the largest beef processor and exporter in Brazil, Argentina and Latin America.