Category: Chile

Chile’s Recalcine (CFR) missed its target on a CLP172.72bn ($368m) IPO, though it saw its shares end up more than 13% in the market. The acquisitive pharmaceutical company with a presence in 19 countries announced a price Thursday morning below the target minimum price it had set for Wednesday’s auction, raising less than the $400m-equivalent it had hoped for. It priced the 2.03bn shares at CLP85 per share, below the CLP90 floor it had wanted. A CLP90 price would have meant a CLP182.7bn ($390m) sale that would have been closer to the $400m expectation. However, the shares were in demand in their first session, closing Thursday at CLP96.36, up 13.4% from the issue price. Total demand on the Chile’s first IPO of the year reached CLP1.56trn ($3.40bn) from 4,518 orders, but orders at or above CLP90 were not sufficient and the issuer chose to price below, according to a Bolsa filing. About 24% of the sale was bought as ADS, and foreign investors buying local shares accounted for another 31% of the deal, according to the bolsa. Domestic pensions and insurance companies made up 21%, and 10% went to retail investors, with the remainder going to other investors. Analysts’ fair price estimates varied between CLP70-CLP100 prior to the sale. Most see it as an attractive investment given its strong presence in the region and capacity to expand in LatAm and other EM as the health sector reaches more people with rising incomes in these countries. CFR is raising funds for new acquisitions, as well as for refinancing debt and organic expansion. The sale includes 1.7bn primary shares, as well as 336m secondary shares sold by the controlling Weinstein family. LarrainVial, Jefferies and JPMorgan managed the sale, the first Chilean IPO since a CLP109bn sale from Camanchaca in November. Next up in Chile’s IPO market is fishery AquaChile, pricing an IPO May 19 targeting about $250m equivalent.

Chilean pharmaceutical company Recalcine (CFR) is set to announce the price on its approximately $400m IPO this morning, following conclusion of the auction process yesterday. Analysts were estimating a CLP70-CLP100 fair price for the 2.1bn shares, which would indicate a CLP147bn-CLP210bn ($318m-$455m) deal. Bankers had estimated the deal would raise just above $400m. Analysts like CFR’s diversity, growth plan and the sector’s high barriers to entry for competitors. The pharmaceutical industry should see growth of 5%-8% in 2010-2014, according to Chilean brokerage Security, led mainly by EM growth. Security sees fair value for the shares at CLP82, with a CLP88 year-end target, and recommends buying at up to CLP70, it says. The pharmacy is offering 1.8bn primary shares, as well as 336m secondary shares to be sold by the controlling Weinstein family. Recalcine is raising funds for new acquisitions, as well as for refinancing debt and organic expansion. “The country mix should keep expanding if CFR keeps doing what it is doing now,” says Alex Sadzawka, analyst at Celfin, who declines to comment on his firm’s price recommendation. He sees particular opportunity in Southeast Asia. “There should be a drive for M&A, and there is space for organic growth in countries like Argentina, Peru and Colombia. There is lots of room to expand different business lines into other countries,” he adds. Recalcine is in 19 countries in Asia, the Americas and Europe, either through direct operations or joint ventures. Larrain Vial, Jefferies and JPMorgan are managing the sale, which represents about 24% of the company’s capital. The stock marks a relatively new angle for the local bourse, with only the less diverse generic drug specialist Andromaco represented from the pharmaceutical sector.

Cruz Blanca Salud is expected to raise at least $150m equivalent in an IPO, according to Chilean equity bankers. The Chilean health insurance provider is currently undergoing the regulatory process, and the timing would likely be June at the soonest. Cruz Blanca has filed to sell 158.9m shares, but a banker on the deal says the size is still unclear and could be increased depending on how many secondary shares the issuer chooses to sell. It plans to use 65% of the proceeds to support its growth agenda, which include both organic and inorganic expansion, according to a regulatory filing. The other 35% would go toward strengthening Cruz Blanca’s financial profile. Bice, Celfin and IMTrust are managing the sale. Founded in 1981, Cruz Blanca was at one time part of Aetna, and later ING, from which present owners Linzor Capital and the Said family bought it in 2008, according to its website. It claims 20% of the market in Chile, covering 530,000 people.