Category: Brazil

Brazil’s Itau, which recently poached senior private banker Flavio Souza from UBS’s Zurich office, is boosting its bid for a bigger slice of Latin America’s growing private banking and wealth management market. In new offices in Miami and Zurich, Itau will install a team of six bankers, four of whom were poached directly from UBS. Souza and Marcelo Coscarelli, both of whom worked at UBS’s Zurich office, will relocate to Miami with the former heading the LatAm private bank and Coscarelli to head Banco Itau Europa’s Americas operations. Teodor Horat, from Hyposwiss Private Bank, will be a member of Itau Scwheiz’s board, while Daniel Esslinger from UBS will be head of sales and markets for the burgeoning branch. Stefan Jenni, also from UBS will work out of Itau’s Zurich office, as will Paul Hunt, who comes from Rothschild Bank Switzerland. More hires are forthcoming, says the Brazilian institution.

Brazilian miner Vale plans to invest $479m in a phosphate project in Peru. The Bayovar project, located near the city of Piura in Northern Peru is expected to have capacity of 3.9m tons per year and will start production in 2010, Vale says. The project includes construction of a phosphate concentration plant, roads and a silo. Last week, Moody’s upgraded Vale’s global local currency rating to Baa2 (stable) from Baa3 (stable), highlighting strengthened financial metrics brought by robust metal prices.

Brazilian rental car provider Localiza plans to sell BRL300m in 2012 bonds to raise funds to expand its fleet. It expects to set the interest rate during bookbuilding. Localiza plans to follow up with another BRL300m placement in October, as it aims to raise $500m in international and domestic debt by the end of the year. Unibanco is managing the sale.

Lojas Renner, the Brazilian department store chain, is paying BRL670m for its rival Leader. Renner agreed to buy 100% of the shares of rival Leader Varejo, the retailing arm with 39 stores along the central and northern coastline of Brazil, and 50% of Leader Credito, a consumer financing unit. Bradesco owns the remaining 50% of Leader Credito. The deal was set in motion in March and closed Wednesday. Renner will pay out BRL440m for the shares initially, and an additional BRL230m over the coming 5 years.

AIG Investments has put BRL60m into Advento Participacoes, a Brazilian specialty engineering services provider. The investment, which carries the option to spend BRL20m more in the future, will come via AIG’s Brazil Special Situations Fund II, which closed in April with $692m in commitments. Advento plans to use proceeds to acquire Brazilian builder Serpal Engenharia e Construtora. It is the fund’s fourth investment, following stakes in Brazilian textile manufacturer Companhia Providencia, Colombian grower Falcon Farms, and Louis Dreyfuss Commodities’ Calyx Agro agricultural land acquisition venture.

The auction of Minera Autlan is heard gaining momentum, with a number of large strategic bidders apparently readying offers. Brazilian mining giant Vale is understood to be among foreign parties interested in scooping up the Mexican manganese and ferroalloys producer. It is competing with global steel and mining players including Eramet, BHP Billiton, Tenaris, Citic and Glencore, according to executives away from the seller. Vale has a substantial M&A cash warchest and may seek to extend its dominance in manganese beyond its already abundant supplies in Brazil, say analysts. Autlan presents some interesting synergies, including the chance to mix Vale’s high-grade manganese with Autlan’s low-grade output to produce ferroalloys. The price of manganese has soared in recent months thanks to high demand from steel producers. At yesterday’s close, Autlan’s market cap stood at $2.03bn, which suggests it could go for over $2.40bn if a buyer agrees to a 20% premium, in line with competitive auctions. Autlan’s shares have leapt 396% in 2008 alone and closed yesterday at MXP78.73. Bids are heard due by the end of September, and officials close to the company provide a broad timeframe for the deal’s conclusion that runs into early next year. Autlan tapped Lehman to advise on the sale.

Brazilian and Russian equities are trading at roughly the same P/E and P/B ratios, but the fact that Brazil is lower risk, thanks to its higher quality macro policies, makes it a more attractive investment, according to UBS Pactual. A recent selloff in Russia does not provide a buying opportunity, says the shop, which argues it is unlikely the country’s stocks will outperform other EM in the coming 3-6 months. Brazilian oil stocks like Petrobras, however, do present upside because of the growth profile, and any recovery in GEM energy stocks will give Petrobras a bigger lift than Russian companies, says UBS. Petrobras’ stock is trading around BRL33.00, some 37% off its historical high of BRL52.51 hit on May 21 2008.

Chilean wood board maker Masisa is putting together debt refinancing in Chile, and seeks funds for expansion in Brazil. It is assembling a refinancing of $100m in short-term debt, CFO Eugenio Arteaga tells LatinFinance, and also considering the international syndicated loan markets or issuing dollar or UF bonds at home in Chile. “Spreads have widened and liquidity is a little tighter,” he says. “What maybe more attractive is a club deal, with distribution to a few banks – three to five banks that may take the company risk and structure something attractive to our terms.” CEO Enrique Cibie says the wood producer aims to focus more on forestry, to ensure a healthy supply of raw material, especially in Brazil, which it sees offering great demand going forward. To help fund this and a new production plant in Brazil, Cibie says Masisa is considering divestures over the next 12 months, and pursuing up to $65m in BRL-dominated funds from the BNDES.

Three Brazil-focused senior executives and two private bankers have left the UBS wealth management team, leaving a gap in the upper echelons of the LatAm business. The departures further undermine the Swiss bank’s Brazil franchise, which is already under pressure after the defection of several high ranking investment bankers. Flavio Souza, a Brazilian executive who headed the Brazil private wealth management desk out of Zurich, has left for Itau, apparently for a higher paying job. He is replaced by Michael O’Keefe, who worked below him. Ernesto Leme and Marcos Hatushikano, two senior executives responsible for covering some of the group’s deep pocketed clients, have left to start a new team at local asset manager Claritas. They are apparently joined by Pedro Madia and Eduardo Marques, with whom they worked at Pactual, say people with knowledge of the matter. Among the incentives for their departure was the opportunity to be partners in their own business – a model widely employed at Pactual prior to its merger with UBS that drew aggressive climbers to the bank. Earlier this year a team of investment bankers left UBS Pactual for Merrill Lynch, a move that was followed by a broad-based defection of over a dozen traders and executives to a new fund, including LatAm chairman Andre Esteves.

Gerdau, the Brazilian steelmaker, says it will pour $1.4bn in new funds into its Siderperu plant, located in the northern coastal town of Chimbote. The purpose of the capital injection is to increase the plant’s installed capacity to 1.5m tons by 2011 and 3.0m tons by 2013. That would mark a sixfold increase in production, says the company. “Peru is a strategic country for Peru because it is a market with great potential for further development,” CEO Andre Gerdau Johannpeter says in a statement.