Category: M&A

Equity is by far the biggest money spinner for banks in the region, Dealogic data shows. Volume, at $11bn so far this year, is less than a third of M&A ($33bn) or debt ($34bn). But the fee pool is more than twice as big. ECM fees in the year to May 15 were $318m, while M&A paid out $142m and debt $167m, according to Dealogic.

Chilean retailers – D&S and Falabella – have announced their merger, confirming rumors that have been swirling around the market for some time. Upon completion, the shares of D&S will be exchanged for 23% of the shares in the new company; while the shares issued by Falabella will be exchanged for 77% of all the new shares. The merger will create the largest retailer in the market, overtaking market leader Cencosud, with projected sales of $7.8bn against around $6bn by the current market leader. The new entity will also become the second-largest retailer in the region, after Mexican firm Walmex, which recorded turnover last year of $18bn.

Deal activity in the mid-sized bank sector is expected to continue this year, following Bradesco’s January acquisition of Banco BMC for BRL800m and Société Generale’s February purchase of Cacique, for BRL900m, according to panel members at the 6th annual Securitization in Latin America Summit (Silas), a LatinFinance/Euromoney conference in Miami. “It’s pretty much the easiest way for these [big] banks to gain access to middle market [credit portfolios],” Eduardo Lisbôa Rocha, an executive at Boa Eseperança Recebíveis, a São Paulo-based asset securitization shop, tells LatinFinance. “We’ll see more acquisitions throughout the year,” said Rocha, who works with a range of credit providers. On Tuesday, Bradesco’s president Marcio Cypriano told attendees at an investor conference in London that his bank is hunting for assets in the sector. The race for high-yielding credit portfolios is being spurred on by the fact many mid-sized banks are lined up for IPOs. “Big banks are racing to buy up these banks before they go public and get more expensive,” says a São Paulo-based banker.

Ternium’s acquisition of IMSA, announced Monday, is expected to yield between $3.7bn and $4bn in long term bank loans. The acquisition of IMSA shares will cost Ternium, a unit of Techint, $1.7bn, which will be raised in the loan market. Separately some of the existing debt held by IMSA, heard at $1.5bn, and by Hylsa, which Ternium acquired in 2005 for $1.3bn via a 3-part loan, will likely be refinanced too. The disparate loans are also expected to be consolidated into a single Mexican entity farther down the line. Calyon is the global-coordinator with Citi as joint lead.

The final lineup of banks looking to participate in Telemar’s acquisition financing package of BRL11bn ($5.45bn) is still in flux, according to loan market bankers. While some local press and rumors have suggested a final lineup of five banks, participants on the deal say there are slots still up for grabs. Lenders like JPMorgan, Credit Suisse and UBS appear consistently as mandated firms, while others, like ABN AMRO, Banco do Brasil and Citi, one of Telemar’s relationship banks, have also appeared, though with less consistency.