Category: Brazil

ArcelorMittal has agreed to acquire London Mining’s Brazilian iron ore operations for $810m and, separately, to buy an 80% stake in a Brazilian port project from Canada’s Adriana Resources for $42m, in a move to increase its access to raw materials. The steelmaker intends to pay for both transactions with cash on hand, a spokesman tells LatinFinance. Arcelor now plans to invest up to $700m to increase production at its newly acquired mines, located in the state of Minas Gerais. It will use the port facility, to be completed at Mangaratiba in the state of Rio de Janeiro at a total cost of $250m, to ship its ore to steel production facilities throughout the Atlantic basin. Arcelor will develop the port jointly with Vancouver-based Adriana, and the two will share capacity in proportion to their ownership. RBC advised ArcelorMittal on both transactions. UBS and Kaupthing Singer & Friedlander advised London Mining.

Chicago-based Equity International has deployed $100m to help capitalize private Brazilian logistics company AGV Logistica. The move is the investment company’s first foray into the logistics sector. Equity Internatioanl has had a successful LatAm track record with private investments in Gafisa, BRMalls and Homex, all of which are now public and have become leaders in their respective sub-sectors. AGV, established in 1999, has 30 facilities in 11 states in Brazil. “AGV represents a strategic extension of our investment portfolio in Brazil,” said Gary Garrabrant, CEO of Equity International. The deal follows successful ventures in the logistics sector by real estate private equity firms such as Hines, which owns and operates three units in Sao Paulo. As Brazil’s economy expands, the need for the transportation and storage of goods and consumer products increases and with it, the need for logistics centers. Many of Brazil’s logistics facilities are old, or outdated, says one investor eyeing the space. That makes the sub-sector a compelling option for real estate investors to diversify their product and regional strategies.

The board of Brazilian software company Totvs has obtained a BRL205m loan from development bank BNDES to compliment a sale of BRL200m in debentures. The 6-year facility will pay TJLP plus 1.5% and be used to fund the development of new products. Totvs has also launched the private placement of BRL200m 2019 debentures backed by a guarantee from BNDES, paying TJLP plus 1.5%. The bonds are being offered to Totvs shareholders during a 30-day subscription period, with BNDES purchasing any unsubscribed notes. In July, Totvs and announced talks to acquire competitor Datasul for BRL480m plus 4.6m Totvs shares.

As expected, Bradesco has signed deal with Bank of Tokyo-Mitsubishi to offer Brazilian fixed-income investment funds to Japanese investors. Bradesco’s asset management unit will manage the first fund, to be distributed in Japan by Mitsubishi’s asset management arm. The banks did not give an indication of the fund’s size. The operation is part of the Brazilian bank’s plan to expand its presence internationally, following the announcement earlier this month that it plans to open brokerage units in Dubai, Tokyo and Hong Kong.

The pace of private capital deployment for Brazilian real estate appears unhindered by tightening credit conditions and rising aversion to the sector, particularly in developed markets. Three private equity (PE) firms are targeting some $3.8bn in fundraising dedicated to real estate, mostly commercial. PE investor Hines is pressing ahead with plans to raise a new vehicle for Brazil. The fund, apparently targeting $800m, is likely to be closed this year, say people familiar with the firm’s plans. Unlike the past two funds Hines – a real estate-focused shop – has raised for Brazil, the forthcoming vehicle will rely on contributions from a host of new investors, say people away from the process. Previous Hines funds were purely for Calpers, and this fund will tap other sources. Several senior Hines executives were spotted in Sao Paulo last week gauging market conditions. Elsewhere, Tishman Speyer is preparing a follow-up vehicle to its debut $600m fund raised in 2007, say people close to the company. Executives away from the process say the new entity will top $1bn in size. Brascan is also targeting a new $2bn real estate investment vehicle, according to people away from the process.

A number of overseas investors are looking to jump into Brazilian real estate for the first time. Funds both large and small, primarily based in the US, are examples of the interested parties spotted at the LatinFinance Brazil Real Estate Finance, Investment & Securitization seminar, held yesterday in Sao Paulo. While unsure about the format and subsectors of real estate they would target, newcomers see in Brazil the kinds of technical factors that led to a boom in Mexican real estate several years ago, say executives at the funds. Brazil, however, has greater scale and a more diversified asset base in which to invest, they add. Among delegates expressing interest in the country’s still hot real estate market are JER Partners – apparently eyeing a new fund for Brazil, Mexico, Colombia and Peru – and Explorador, a San Francisco based hedge fund seeking to partner up with another US investor to raise $500m for LatAm real estate. Also feeling out the markets are New York based HCP Real Estate Investors, Palo Alto based Broadreach Capital Partners, and Prudential, which has real estate investments elsewhere in the region.

Brenco, the Brazilian bioenergy developer headed by former Petrobras chief Henri Philippe Reichstul, has sold 13.4m megawatt-hours of reserve energy at a government auction, resulting in revenues of BRL2bn from 2010 to 2024. The energy will be generated from bagasse remaining from the crushing of sugarcane at its mills. Last week Brenco obtained BRL1.2bn in loans from development bank BNDES to fund part of the construction of the Alto Taquari-Mineiros facility, among the first of its mills, which will produce 220MW of electricity and 370m gallons of ethanol per year. Brenco’s initial investment plan calls for spending BRL5.5bn to develop 8 mills. To compliment its debt fundraising, it is aiming for an eventual $300m-$400m IPO.

Mitsubishi UFJ Asset Management and Bradesco Asset Management are expected to announce today a mutual fund that invests in Brazilian bonds. Japanese press says the fund – targeted at Japanese investors – could draw several hundred billion yen, or several hundred million dollars in assets. A Bradesco Asset Management official says the fund will be announced today, but declines to confirm any specific details. It is expected that Bradesco will manage the fund and arms of Mitsubishi Financial Group will market it in Japan.

Three subsidiaries of Brazilian transportation logistics company ALL are planning to raise BRL500m in 2018 bonds. ALL’s Ferronorte, ALL Malha Sul and Ferroban units will each take a BRL166m tranche of the sale. The notes pay 108% of DI. Proceeds will fund ALL’s investment plans at each unit. Credit Suisse is managing the transaction.

Geracao Paranapanema is returning to market in an attempt to raise up to BRL470m through the sale of debentures. The unit of Duke Energy International did not disclose a timeframe or additional financial details, as the transaction awaits approval from shareholders and Brazilian regulators. It would be a debut debenture from the firm, which pulled BRL750m in 2014s and 2016s at its last attempt through Citi and Itau.