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.
Category: Middle East
Posted inDaily Brief
Middle East Appetite Growing as Abu Dhabi Makes EBX Bet
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
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Santander Brazil Surrenders 4.41% to Qatari Bondholder
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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Saudi Dairy Buys Argentina’s Fondomont
Saudi dairy company Almarai has acquired Argentine farm operator Fondomonte for SAR13m ($83.19m), in a transaction that gives Almarani a source for animal feed. The Saudi company financed the transaction with a combination of operational cash flow and funds from Islamic banking facilities, the company says. Officials at Fondomonte could not comment on acquisition details and Almarai officials could not immediately be reached for comment. Fondomonte controls three farms with an combined extension of 12,306 hectares where it produces soybean and corn.
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Qatar Buys Into Santander Brazil
Santander has agreed to sell a 5% stake in the Santander Brasil unit to Qatar Holding in the form of $2.72bn in convertible bonds. The mandatorily convertible 6.75% 3-year notes come with an exchange price of BRL23.75. The deal with the sovereign wealth vehicle will help Santander Brasil reach its goal of a 25% free float by 2014, Santander says. Last year’s BRL12.3bn IPO of the Brazil unit floated about 15%. Santander Brasil closed Monday at BRL24.53.
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ABC Brasil Raises Tier 2
Banco ABC Brasil has sold $300m in Tier 2 bonds in its debut dollar market issue. The Ba1 rated mid-sized corporate credit specialist controlled by the Arab Banking Corporation priced the 2020 at 98.311 with a 7.875% coupon to yield 8.125%, or UST plus 428.8bp, in line with 8.125% area guidance. The book reached more than $600m, according to bankers on the deal, with more institutional participation than had been anticipated. The deal went 32% to European accounts, 31% to North America, 22% to LatAm, and 15% to Asia, a banker on the deal says. A very small percentage sold to the Middle East. Buyers include 32% fund managers 23% private banks, and 24% banks. ABC had met investors last year and again in February, before visiting the US, Asia, Europe and the Middle East immediately preceding the deal. The bank had been heard aiming for $200m-$250m. The bond traded up about 0.5 points Wednesday afternoon, according to investors. HSBC, Itau, and Santander were joint bookrunners on the 144a/Reg S trade.
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Carlyle Purchases Mexican Retailer
The Carlyle Group has bought Arabela, a door-to-door retailer of beauty products, from Procorp and Advent International, a private equity firm, for an undisclosed amount. Executives at the private equity firms and Arabela said in a release that the process marks a transition into a second stage of growth for the company, which was founded in 1991 by Procorp. There will apparently be no changes in senior management. Scotia Capital provided the acquisition financing.