Santander Chile Shares rose nearly 10% in their first session following a well-bid $949m follow-on, reflecting the transaction’s 2x-plus demand. It sold 14.74bn shares, represented by 14.19m ADS, at CLP33.00, or $66.88 per ADS, to bring in a total of CLP486.47bn ($949m). The price was slightly higher at $66.58 at Tuesday’s close, and the shares rose 9.45% Wednesday to $72.87. The deal saw $2.01bn in competitive demand from 2,041 accounts, Santander Chile says. Foreign ADS buyers accounted for 65.02% of the offer, with local pensions and institutions getting 20.00%, foreign institutions buying local shares getting 7.94%, local retail investors 3.52% and retail ADR buyers 3.52%. In all, about 70% of the buyers were international, which bankers say is much higher than their the one third foreign participation normally seen in Chilean deals. Analysts initially expressed skepticism about the strength of demand, but bankers say a 7.4% drop in share price between the deal’s announcement and Tuesday may have lured buyers who always considered the bank a quality asset. Santander’s decision to extend the lockup period to 1 year, also helped, bankers say. The deal, sold through the Teatinos Siglo XXI Inversiones vehicle, represents 7.8% of the Chilean unit, which now has a 33% free float, up from 25%. Santander, Bank of America Merrill Lynch and Credit Suisse managed the international portion, while Santander and LarrainVial handled Chilean orders. The sale was somewhat overshadowed by the announcement late Tuesday of Santander’s complete pullout from Colombia, another part of the plan to cover a EUR6.47bn ($10.08bn) capital shortfall to meet new capital requirements imposed by European regulators. The bank has said it will retain earnings and sell assets in order to raise its core capital ratio to 10% from about 8% by June. It is also seeking to sell up to 8.2% of the Brazil unit, which could bring in as much as $2bn. The next sale in Chile’s market is the government selldown
Category: Chile
Vergara Named Chile CB Head
Rodrigo Vergara has been named governor of the Chile’s central bank, replacing outgoing head Jose De Gregorio. His term starts Saturday and lasts 5 years. Vergara, already a board member, had long been thought to be the most likely successor, according to Nomura. Chile holds its final interest rate decision meeting of the year Tuesday.
Cash-Hungry Santander Sells Colombia Unit
Chile’s CorpBanca has agreed to acquire nearly all of Santander’s Colombia unit, in a deal valued at $1.225 billion plus interest. The move marks a substantial sale for the Spanish bank which has been selling assets in LatAm in an effort to bolster the parent’s balance sheet. CorpBanca will acquire a 95% stake for $1.155bn, financed with its own cash and a $450m capital increase from its holding company, the Saieh Group’s CorpGroup Interhold. CorpGroup Interhold also plans to purchase at least an additional 2.85% stake from the remaining 5%. All in all, the CorpBanca and CorpGroup purchases will amount to $1.225bn plus accrued interest of 180-day dollar Libor +1% per year, a deal seen as pricey, but not out of line in a neighborhood where bank assets are expensive. “This is a good asset, and one of the assets Santander can sell at a higher multiple, a bit expensive to the average in Colombia,” says a New York-based FIG analyst, spotting the multiple at around 3.0x book value, compared to Bancolombia trading at 2.4x. A CorpBanca spokeswoman says the acquisition has an implied multiple of 2.7x. The numbers compare with the 3.0x-3.6x seen in Scotia’s $1bn acquisition of 51% of Colpatria in October, also seen as a steep price to enter Colombia. Still, with Colombia attracting lots of attention in the financial space recently – Peru’s BCP paid $76m for 51% of brokerage Correval last week – the New York analyst imagines several foreign and domestic bidders were interested, even at the high prices the country demands. Less clear is to what extent CorpBanca might be able to grow in Colombia. CorpBanca did not have an outside advisor on the deal, the spokeswoman says. Santander officials could not be reached. CorpBanca claims the deal makes it the first Chilean financial institution having a foreign bank subsidiary. At the same time, CorpGroup has struck an agreement to bring in Grupo Santo Domingo as an investor in CorpBanca for $100m. Santander Colombia has $4bn in total a
Rabobank Set for Chile Bond
Dutch bank Rabobank has revived plans to issue bonds in Chile’s local markets, this time targeting an up to UF2m in 5-year bullet. The bank had been initially eyeing a sale last week, including the options of a UF-denominated tranche with a 3.05% coupon and a peso tranche with a 6.05% coupon. Proceeds will be used to fund the bank’s operations. The bond is rated AAA on a national scale. Celfin and Deutsche Bank are managing.
Banco de Chile Prices MXP Debut
Banco de Chile has raised MXP1.5bn ($111m) in a Mexican domestic bond market debut, pricing a 3-year bond at TIIE+ 60bp. With this transaction, the bank becomes the third Chilean issuer to raise debt in Mexico, following similar moves by Banco de Credito e Inversiones (BCI) and miner Molymet. Over 20 accounts participated, including mutual funds, insurance companies and retail, allowing the issuer to see around 1.3x demand. Banco de Chile’s pricing came in line with 50bp-60bp guidance. This was the first bond off a MXP10bn shelf. Banamex and JPMorgan led the transaction, rated AAA on a local scale. In July, BCI priced a MXP2bn 5-year floater at TIIE+40bp, while Molymet in April issued MXP1.5bn 1.5-year bonds at TIIE+55bp.
Mexico Makes MILA Interest Official
Mexico’s stock exchange has signed a letter of intent to begin studies to join the Mercado Integrado Latinamericano (MILA). The move makes its interest official after several previous indications from both sides. It does not give any additional details or an indication of when it might be able to join the alliance of the Peruvian, Chilean and Colombian bourses launched this year.
Santander Chile Set for FO
Santander Chile is scheduled to price today a secondary share equity follow-on that is expected to raise more than $900m. The Spanish parent is looking to sell the 7.8% of the Chilean unit held by the Teatinos Siglo XXI Inversiones vehicle, to strengthen its capital position. With Santander targeting the sale of 14.74bn shares, represented by 14.19m ADS, the transaction could reach $922m in size based on Monday’s closing ADS price of $64.96. The shares have dropped 9.65% from the $71.90 close the day before the deal’s announcement November 22. Santander, Bank of America Merrill Lynch and Credit Suisse are managing the international portion, while Santander and LarrainVial will handle Chilean orders. The transaction comes as part of a larger selldown that also involves reducing its stake in its Brazilian operation. The announcement follows the renewal of a shelf to sell secondary shares of Santander Brasil. Santander could sell up to 8.2% of the Brazilian unit in a transaction that would fetch north of $2bn, though it has yet to specify any offering plans, and may opt for a series of smaller block trades rather than a large market deal. Santander has to cover a EUR6.47bn ($10.08bn) capital shortfall to meet new capital requirements imposed by European regulators. The bank has said it will retain earnings and sell assets in order to raise its core capital ratio to 10% from about 8% by June.
Agrosuper on Track for Inaugural Bond
Chilean food products company Agrosuper is expected to issue a debut local bond in the next few weeks through Banchile Citi and LarrainVial. The roadshow is slated to begin Monday, says a person familiar with the transaction. Agrosuper has been heard seeking up to UF5m ($216m) in the domestic bond markets and is said be in the early planning stages for an IPO, also through Banchile and LarrainVial.
Banco de Chile Talks Price
Banco de Chile is looking to pay TIIE+50bp on an up to MXP1.5bn ($111m) 3-year bond, marking a debut for the issuer in the Mexican domestic market. Banco de Chile will be the third Chilean issuer to raise money there following similar moves by Banco de Credito e Inversiones (BCI) and miner Molymet. In July, BCI priced a MXP2bn 5-year floater at TIIE + 40bp, while Molymet in April issued MXP1.5bn 1.5-year bonds at TIIE+55bp. Pricing is scheduled for December 6. Banamex and JPMorgan are leading the transaction, rated AAA on a local sale.
Southwater Raises Domestic Funding
Inversiones Southwater, an Ontario Teachers’ Pension Plan-controlled holdco for 4 Chilean water assets, has sold UF5.6m ($241.5m) in 25-year bonds, priced with a 4.5% coupon to yield 4.3%. Banchile was the sole lead. The bond is non-callable and amortizes starting in year 23.