Category: Chile

Chile’s Clinica Las Condes will Wednesday raise $64m through a local rights offering of 1.79m shares at CLP18,500 each. Local investment bank IM Trust is leading.

Empresa Electrica Guacolda, a Chilean power company, is heard to have put out an RFP for between $200m-$300m in project financing of up to 15 years, according to executives close to deal. The financing would fund the company’s fourth thermoelectric plant. The previous unit was financed with a Calyon-led facility.

The equity portion of a concession to operate two toll roads in Chile – the Santiago-Los Vilos road and Carretera Itata – could go for more than $300m, according to a banker close to the process. Mexican development bank Nafinsa is overseeing the process, and has hired BNP Paribas as its financial adviser. The reason for Nafinsa’s involvement is that the road was originally built by Tribasa, a Mexican concessions and building company, with a loan from Bancomext, which eventually took over the concession following a series of defaults. The project has accumulated up to $460m in debt and the auction will be for the equity portion of the concession. Deal documentation will be distributed by mid-October, with a final deadline for the sale slated for March 2008.

As expected, following exclusive talks on the asset, Scotiabank has agreed to take 79% of Chile’s Banco del Desarrollo for $810m and intends to buy more. The stake will be purchased from Sociedad de Inversiones Norte Sur, a Chilean investment firm that holds 39%, Credit Agricole with 24% and Intesa Sanpaolo which has 16%. The agreement includes provisions to adjust the price based on due diligence. “As required by local rules, Scotiabank will be making a public share offering on the same terms and expects to acquire up to 100% of Banco del Desarrollo, which would be valued at $1.03bn,” says Scotia. “This is a unique opportunity to increase our market penetration in one of the most developed and attractive markets in Latin America,” says Rick Waugh, Scotia president and CEO. He adds that Chile has “scarce assets available for purchase.”

Chile’s Codelco has launched to general syndication a $400m 7-year step up loan, which is being closely watched to gauge how US volatility is affecting LatAm lending. The deal pays a slim 12.5bp over Libor in year one, 15bp in years two through four, 17.5bp in year five and 20bp in years six and seven. On offer for retail participants are 12.5bp fees for a $30m ticket and 7.5bp for a $15m ticket. Bank of Tokyo Mitsubishi, Export Development Bank of Canada and RBC joined as MLAs on the transaction, which is being led by BBVA. The bank meeting held Tuesday is heard to have been well attended, though some non-participants are skeptical the company will have an easy time raising the money, given skimpy margins and even tighter fees. Business with the state-owned Chilean miner, LatAm’s highest rated corporate, is coveted by many banks. The nebulous value of a relationship will distort pricing.

Chilean Coca-Cola bottler Embonor tapped the local bond market for $54m worth of UF denominated inflation-linked notes at a spread of 94bp over the 10-year central bank bond, to yield 4.13%. The deal came in line with market expectations, a local investor who participated on the deal tells LatinFinance. While broad guidance was issued at 85bp-110bp over the BCU, market expectations were at the 90bp-100bp level. “It’s a good price for us and the company,” says the investor. Larrain Vial, a local brokerage and bank, led the offering.

Ontario Teacher’s Pension Plan, the Canadian pension fund manager and private equity firm that last week acquired 49% of Chilean water utility Esval for $365m, will be financing part of the purchase by tapping the local debt market. A very likely possibility would include issuing a long local bond, say executives who have worked on similar deals. Ontario is looking to make long-dated investments in regulated entities, which include utilities and infrastructure. So far the fund has been restricted to Chile and Mexico, but it is heard to be eyeing Brazilian deals now too. “We like these companies for a number of reasons. They are regional monopolies with exclusive rights to operate in their geographic area, they provide stable low-risk returns, and they have a very long economic shelf life consistent with our long-term investment goals,” said Jim Leech, senior vp of Teachers Private Capital.

Unibanco Asset Management (UAM) is about to close a deal with two investment groups – one in Santiago de Chile and one in Buenos Aires – to provide Chilean and Argentine investors with exposure to Brazilian investments, according to an executive close to the asset manager. UAM will look to raise individual funds of around $100m in each country. While many investors in South America already have Brazil exposure, UAM is hoping to raise interest based on its proximity and experience with the Brazilian market. Itaú, which has a retail presence in Argentina, already invests Argentine funds in Brazil. Other Brazilian banks are heard considering similar moves.

Scotiabank said Friday it had signed an exclusivity agreement with Inversiones Norte Sur related to discussions concerning its shareholding in Chile’s Banco del Desarrollo. Discussions are continuing. The transaction has an estimated value of $1bn, according to Chilean media. The rumors follow Citi’s purchase of a piece of Banco de Chile, which Moody’s predicted would have wider repercussions. Other potential targets in Chilean bank M&A include CorpBanca and Banco Security, according to the agency.