Category: Middle East
Posted inDaily Brief

Middle Easterner Targets Afore Cash

by LatinFinance

Dubai-based investor Abraaj Group is preparing a fund for Mexico’s certificado de desarrollo de capital (CCD) market, according to regulatory documents. The size and timing for the 10-year fund remain to be determined. The fund will target private equity investment in “mid-size” Mexican businesses in need of growth capital, following the model of the Aureos Latin America Fund. Abraaj bought Aureos Captial, whose small and mid-size investment tickets usually fall in the $0.5m-$15.0m range, in 2012. A parallel private equity fund may be created to invest alongside the CCD funds. The return structure is expected to be principal plus an 8% preferred return, before distributing according to the 80%-20% model typical of private equity. Santander is managing the transaction. Abraaj manages $7.5bn globally, and its LatAm operation is managed from Mexico City, and led by Erik Petersen and Miguel Olea.

Posted inDaily Brief

EBX Loses CFO, Tweaks Mubadala Deal

by LatinFinance

Otavio Lazcano has resigned as CFO of Brazil’s EBX, the company says. CEO Eike Batista will step in to assume his duties. The move comes as several of the group’s operating companies face liquidity concerns and falling share and bond prices. Separately, EBX announced that has cut the exposure Abu Dhabi sovereign wealth fund Mubadala Development Company has to EBX. “EBX has redeemed a significant portion of Mubadala’s initial investment. EBX and Mubadala have also entered into new agreements ensuring enhanced protection vis-a-vis the remaining portion of the investment from Mubadala,” EBX says. The company did not respond to a request for clarification on the nature of the adjustment. Mubadala paid $2bn for a 5.63% stake in EBX in March 2012, one of a string of high-profile investments in Batista’s group from large players outside LatAm. OGX, the EBX unit in the weakest position, saw its 2018 bonds fall 3-5 points to around 19-20 Wednesday, according to a trader.

Posted inDaily Brief

Abu Dhabi Plucks Brazilian Fund Manager

by LatinFinance

Eduardo Favrin has been named head of Latin America for the Abu Dhabi Investment Authority’s (ADIA) internal equities department, ADIA says. Favrin, who comes from HSBC Global Asset Management in Brazil, will be based in Abu Dhabi and report to Mohamed Al Khoori, executive director, internal equities department. He will lead a team of senior portfolio managers and be responsible for developing strategy, managing risk and overseeing management of Latin America-focused investment portfolios. Favrin had been at HSBC since 2006, and was previously at Fator and JPMorgan Flemming.

Posted inDaily Brief

Middle East Appetite Growing as Abu Dhabi Makes EBX Bet

by LatinFinance

Abu Dhabi sovereign wealth fund Mubadala Development Company has agreed to pay $2bn for a 5.63% stake in Brazil’s EBX group, underscoring the growing trend of big-ticket Mideast equity investments in LatAm. Bankers say they are spending more and more time pitching sovereign wealth funds with investment opportunities in a diversifying number of LatAm sectors, with the caveat that the Middle Easterners need size. “We are talking a lot to these investors to pitch them private transactions. There has been an increased interest since the end of last year,” says a Sao Paulo-based ECM banker, referring to investments with structures similar to EBX and other deals recent years, including investments in BTG Pactual and Santander Brasil. This interest does not yet appear in the public equity transactions, he notes, in which tickets are not big enough to meet buyer appetite. “These deals take time, and like any other country, you start with the most solid and concrete sectors,” says another banker, explaining the pace and the tendency for deals in FIGs and infrastructure. At this point, sovereign funds have a preference for pre-IPO investment in the big names who are sector leaders, bankers say. EBX, the holdco for billionaire Eike Batista’s family of companies, fits this profile and offers exposure to several sectors, mostly in Brazil. The price suggests a valuation of $35.5bn for the privately held group, which is made up of 11 known business units, only 5 of which are publicly listed. The valuation is higher than the total market cap for global oil services company Halliburton, which stands at $31bn. Officials at EBX decline to comment on the transaction. The deal gives Mubadala a 5.65% stake in the Centennial Asset Brazilian Equity Fund, the holding vehicle through which Batista controls EBX and it also gives it a presence in future EBX venture investments. Basing the valuation purely on the value of the listed companies, the price paid by Abu Dhabi is a 40% premium above

Posted inDaily Brief

Santander Brazil Surrenders 4.41% to Qatari Bondholder

by LatinFinance

Spain’s Banco Santander has transferred roughly 4.41% of its Santander Brasil subsidiary to a Qatari government vehicle holding its convertible bonds, exercising an option to covert the notes ahead of schedule as it looks to meet capital requirements. Santander transferred the shares to a third party that would then deliver them to the convertible bond holders, the bank says. The Brazilian unit had transferred to its parent ADRs representing approximately 5.18% of the unit. In October 2010, Santander sold $2.72bn in 6.75% of 2013 convertible bonds to Qatari Holdings, which were convertible into shares at Santander’s discretion at exchange price of BRL23.75 per share. Santander Brasil shares closed at BRL15.34 Monday. The decision to exercise its right to convert the bonds is one of several ways the bank is trying to meet 9% core capital ratio requirement established by the European Banking Association. Santander officials could not immediately be reached for additional comment. The Spanish bank has been shedding asset in Latin America, and cut costs, most recently by laying 15 people from its New York offices in December. Rivals ING and RBS have also recently reduced their LatAm teams in NYC.

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