Category: Equity

Maple Energy, the Peruvian power firm, priced Friday a $55m equivalent IPO on London’s AIM, says Dealogic. Canaccord Adams and Mirabud were the leads, with Banco de Credito del Peru as co-manager. It sold 32.6m shares at 84p each. Maple is a diversified energy company with oil and gas assets.

Brazil’s Redecard IPO surged 27% on its first day of trading with volumes that eclipsed other Brazilian bluechips, according to a Bradesco BBI report. While CVRD, Petrobras and Bradesco saw daily volumes at BRL425m, BRL398m, and BRL192m, trading activity for Redecard clocked in at BRL1.54bn, more than three times CVRD. Unibanco, Itaú BBA and Citi led Redecard.

The Bovespa’s market capitalization reached $1trn and the average daily traded value was over $2.7bn in June, according to the exchange’s monthly bulletin. By comparison May daily volume averaged $2.0bn. The total volume traded in June was a record $54.5bn compared to $44.1bn in the previous month. The most active stocks in terms of trading value were: Petrobras ($5.1bn), CVRD ($4.1bn), Bradesco ($1.5bn), Usiminas ($1.1bn) and Unibanco ($1.1bn). In June, international investors’ total purchase at the Bovespa was $18.8bn, while total sales hit $19.9bn, totaling a net outflow of $1.1bn. In the six months through June, these investors’ purchases at Bovespa amounted to $83.1bn and the sales to $83.2bn, resulting in a net outflow of $65.5m.

Brazil’s rate of inflation, as measured by IPCA, remained unchanged in June at 0.28%, according to the national statistics agency IBGE, taking inflation for the 12 months through June to 3.7% from 3.2% in the 12 months through May. A rise in food prices in June was balanced by a fall in ethanol fuel. The benign inflationary environment should allow the Central Bank room for a further interest rate cut this month, say analysts.

UBS and Credit Suisse rank first and second in LatAm ECM underwriting, with $4.48bn and $3.83bn in volumes through July 6, according to Dealogic. UBS printed 25 deals, garnering 25.2% of the market, while Credit Suisse landed 18, with 21.5%. In third came JPMorgan, with eight deals and $2.37bn, followed by Merrill Lynch, with $1.87bn via nine deals. Citi came in fifth, with $1.67bn across seven offerings. Reflecting the importance of Brazilian flow in the overall ECM figures, Itaú BBA came in sixth in the region with $1.12bn across 10 offerings.

While the US markets took most of this week off, Brazilian IPO hopefuls were busy updating their filings to go public. On July 18, beef producer Minerva hopes to price 27.6m shares at BRL15.50-BRL21.50 to raise $264m, according to Dealogic. Kroton Educacional, a privately held school operator, unveiled Monday plans to issue 12.3m shares at BRL31.00-BRL39.00 via Morgan Stanley and Merrill Lynch on July 20, to raise $222m. And Banrisul, a state-owned mid-market focused bank, updated Tuesday its filing to go public by establishing a price range of BRL10.50-BRL13.50, bringing the expected value of the deal to $1.245bn. The offering is slated to price July 25, and is being brought by Credit Suisse and UBS Pactual.

Invest Tur, a private equity fund focused on Brazil’s tourism real estate market, has launched an IPO scheduled to price in mid-July that will raise between $300m-$400m via Bovespa. The company, headed by Carlos Novis Guimarães, former private-sector coordinator at the IDB, has no assets, and is looking to lure institutional buyers with the management’s credibility and their ability to execute profitable trades in Brazil’s tourism real estate sector. “We already have a $1.2bn pipeline that has been developed over the past three or four years,” Guimarães tells LatinFinance, adding despite the lack of assets, Invest Tur will be listed on the Novo Mercado, Bovespa’s highest corporate governance category. Institutional buyers in the US, Europe, Brazil and Asia will be offered bundles of 30 shares, at $1,000 per share. Credit Suisse, the sole lead, together with the company’s four founding partners, conceived the relatively novel structure for the Brazilian market, says Guimarães, who says the proposal fully aligns managers’ and investors’ interests. This is the second shell acquisition company to go public in Brazil, though it is the first time 100% of the capital is being raised with investors. BrasilAgro raised $276m in a late April IPO, also via Credit Suisse, promising to score agriculture sector deals, though a significant portion of the equity came from the company’s managers.

The CVM, Brazil’s market regulator, is increasing its scrutiny of executive compensation packages and pre-IPO loans of companies that are looking to go public, Maria Helena Santana, head commissioner at the CVM, tells LatinFinance. “We’re seeing executive compensation packages with stock options that represent sizable portions of the capital being raised in the offering,” says Santana, adding as the number of companies made up of assets assembled with the specific purpose of going public has increased in Brazil. In tandem, lavish compensation packages for managers whose long term interests aren’t necessarily aligned with those of public investors have also grown. “We’re insisting they provide more transparency on these packages, with details on the amount of options, vesting periods and dilution.” Another development is the pickup in pre-IPO loans made by underwriters to IPO hopefuls to bolster capital bases and dress up balance sheets. The loans are often convertible into equity once the company goes public. “We want investors to know that this type of transaction is taking place and to evaluate the conflict of interest risk [inherent] in these operations,” says Santana.

Colombia’s largest retailer, Almacenes Exito, is planning a private placement of its shares via the New York Stock Exchange, according to a filing with the securities regulator. Exito will sell ADRs to a group of investors that includes French retailer Casino Guichard Perrachon, which controls Exito, and Colombian pension funds, among others. Exito did not give details of the amount of the share sale or the timing of the transaction.

Drogasil, a Brazilian pharmaceutical chain, is set to price 22,764,661 ordinary shares in an IPO on Bovespa and in a 144a registered deal in the US today, Thursday. The price range for the sale is between BRL12 and BRL15 a share for a total deal value of $151m, according to Dealogic. UBS Pactual and Bradesco BBI are leading. Logistics firm Tegma Gestão Logísitca is also slated to raise up to $300m in a Brazilian/144a sale of 299,277,606 ordinary shares at an initial price range of BRL26-BRL32 reais. JPMorgan and Unibanco have books.