With the Mexican Certificados de Capital de Desarrollo (CCD) pipeline swelling and private equity moving to the front of the line, smaller firms may switch to placing the first Mexican IPOs in almost 2 years. Grower Proteak and developer Tres Marias, among smaller names filing last year for CCDs, have both filed to float on the Bolsa. Regulatory changes approved last year allow Afores to invest in off-index equity, opening the door to funding for small and mid cap issuers. Tres Marias, which is developing a “city within a city” mixed-use project in Michoacan state, has filed for a transaction of up to MXP1bn. “Last year the CCD seemed like the optimal way to access the Afore funds,” says a company finance official. “But with the way that market has developed and with the changes to the Afores’ investment rules, we’ve decided that the best means is an IPO,” he adds. The developer had done marketing for a CCD last year, and expects to resume this month pitching an IPO. Ixe is managing the transaction. Tres Marias saw pre-tax earnings of MXP55.49m in 2009, according to regulatory documents. Meanwhile, Proteak, a grower of teak wood for export, is launching this week an IPO roadshow, according to a banker on the deal. The company is “ready to go public,” the banker says, and has opted to sell stock instead of a CCD, after regulatory changes allow sales to Afores. Proteak, whose earnings depend on trees that take 9-12 years to develop, had a 2009 pretax loss of MXP36.77m, according to its filing. Bulltick is managing the sale, with proceeds for acquisitions and organic growth. The exact size is not disclosed for either deal, though they are each expected to raise under $100m equivalent. Proteak is in the same business as AGSA, the grower that in 2008 first used the structure that would later evolve into CCDs. However, since regulators standardized the structure in 2009, it has proven more suited to PE and infrastructure fund managers with track records than small busines
Category: Regions
Equity Funds See More Inflows
LatAm equity funds recorded inflows for the sixth time in the past 7 weeks, benefitting from more optimistic assessments of US prospects. Mexico equity funds raked in more cash than Brazil counterparts for the fifth time in the past 6 weeks, says EPFR Global. GEM equity funds accounted for $2.01bn, it adds. According to Lipper, LatAm equity funds saw positive performance on the week ended April 8, gaining 0.58% during the week and 2.81% year-to-date. EM equity funds gained 0.81% in the week and 6.03% ytd and global small and mid-cap funds gained 0.74% in the week and 6.87% ytd.
Mexico Real Estate Fund Defines CCD
Vertex Private Equity Investors is targeting a MXP2.3bn size for its real estate fund-based CCD transaction. The firm is also targeting a close of May 11, according to regulatory documents, though as with the total size, closing dates have been a moving target for CCD issues to date. Proceeds will be used to make investments in Mexican real estate assets. The 2020 transaction has a return structure similar to previous CCDs, repaying the initial investment plus up to a 9% annual return, with proceeds beyond that divided 80% for investors and 20% to the manager. Credit Suisse is managing the sale.
Maple Inks Ethanol Financing
Peru power producer and distributor Maple Energy has signed a $140m senior secured debt financing with multilaterals and Interbank for a $254m ethanol project. Maple subsidiaries, Maple Ethanol and Maple Biocombustibles are the primary obligors for the $140m loan. It consists of a $65m senior secured construction and term loan from CAF, a $25m loan FMO and a $25m facility from the IDB, as well as $25m from Interbank. The loans from multilaterals are due 2022 and pay Libor plus 6% per annum, interest only for the first 30 months. The borrowers have the option to convert a portion of the loans from the IDB and FMO to fixed rate once during the term. After physical completion of the ethanol project, borrowers will also be required to make certain cash payments to the lenders in the form of cash sweep and upside interest payments. The cash sweep is a mandatory prepayment of the multilaterals’ loans at an amount equal to 30% of the borrowers’ cashflow available after debt service payments. In addition, borrowers will be required to pay upside interest of 6.5% of their cashflow available after debt service. Commitment fees are payable semi-annually, equal to 0.5% per annum of the undrawn amounts of the loans to multilaterals. The $25m Interbank loan due 2020 pays a fixed 10.75% per annum, interest only for the first 24 months, plus a 50bp annual of the undrawn amount commitment fee. The loan is in addition to equity contributions of $105.5m from Maple, including approximately $68.0m in capital contributed to date and a $8.5m facility primarily related to value-added taxes. The plant, on the northern coast of Peru, is scheduled to start commercial operations during Q2 2011.
Peru Launches Debt Exchange
Peru is looking to push out maturities through the launch of an exchange offer for $3.36bn equivalent in dollar and euro bonds. The offer expiring April 14 targets holders of the 9.125% of 2012 in dollars, 7.500% of 2014 in euros, 9.875% of 2015 in dollars and 8.375% of 2016 in dollars, according to a prospectus. Those accepting will have their choice of reopened 8.75% of 2033 dollar bonds, or cash. The sovereign has capped the cash payment at $500m, with disbursements prorated in the event the limit is exceeded. The exchange spreads and reopening spread for the 2033s will be assigned at the close of the offer, with results announced April 15. Barclays and HSBC are managing the sale.
SinoLatin Preps Debut PE Fund
China-LatAm advisory firm SinoLatin Capital is preparing a debut private equity fund, partner Jorge Barreda tells LatinFinance. He says the shop aims to raise about $300m and to have a first closing between Q4 2010 and Q1 2011. The vehicle will invest in natural resource companies. Barreda expects both Chinese and LatAm institutional investors and individuals to make commitments to the fund. In March, the Shanghai-Pudong regional government granted SinoLatin approval to raise and manage RMB-denominated private equity funds. SinoLatin, which has offices in Shanghai and New York, is focused exclusively on cross-border transactions between China and LatAm. The Shanghai-based firm expects strong and enduring flow of acquisitions by Chinese entities in LatAm natural resources. It offers financial advisory and private equity services for deals in the $100m-$200m range.
Peru Rates Stay on Hold
In line with consensus, Peru’s central bank has kept rates on hold at 1.25%. Bulltick believes the rate will stay on hold until late in the third quarter. Morgan Stanley meanwhile expects the central bank to embark on a more aggressive monetary policy tightening campaign in the second half of the year, lifting the policy rate by 350bp to 4.75%.
Cemex Investing in Peru Project
Mexican cement company Cemex is investing up to $100m in a cement project in Peru with Luxembourg-based investment company Blue Rock Cement Holdings, in exchange for a minority stake. The project is estimated to require a total investment of $230m, according to Blue Rock. A Cemex spokesman declines to say how the company will finance its investment, but explains that the investment will fall under terms permitted by Cemex’s recent debt financing arrangements. The project includes construction of a new cement plant with an initial production capacity of 1m metric tons per year. Cemex will assist in the development, construction, and operation of the new cement plant. The plant is expected to be finished in early 2013.
Colombia Says Global TES Well Through Dollars
Colombia raised $800m-equivalent in global 2021 peso TES bonds at a cost much cheaper than dollars or local market options, Patricia Moreno, the sovereign’s deputy director for international capital markets, tells LatinFinance. She points out that the bonds priced 82bp through the domestic TES curve, and that the indicative swap rate was 35bp below 3-month Libor. This equates to 3.5% equivalent fixed, says a banker familiar with the trade, adding that investors were buying FX and local rates upside. Moreno compares the price to what Colombia pays on its global USD 2019 – the closest liquid reference – which is equivalent to 3-month Libor plus 136bp. “We are committed to this market again,” Moreno says. “We saw there was an appetite, and this gives us another alternative to consider in the future,” she adds. Moreno says Colombia witnessed increased demand for its bonds in the last 2-3 months of 2009, followed by increased demand in the local markets, and renewed interest in a global peso issue. The sovereign has exceeded its $500m borrowing needs for 2010, with the extra $300m going to offset multilateral funding. Moreno says Colombia may consider pre-financing for 2011 later this year, once the new government is in place and budget plans are set. Colombia sold COP1.53trn of the 2021 bonds at par with a 7.75% coupon Wednesday. The price paid on the global TES would suggest that this market is extremely attractive to other LatAm sovereigns. However only a handful – including Peru, Brazil and Uruguay – would be likely to tap, say DCM bankers.
Interbank Maps Roadshow
Peru’s Interbank plans to begin marketing Tuesday a $150m hybrid bond. It will start in Switzerland and Singapore, visiting London and Hong Kong before finishing Thursday in Boston and New York. The step-up junior subordinated NC10 notes due 2070 pay a fixed coupon for the first 10 years, before switching to a floating rate. Proceeds from the transaction will raise funds for Interbank’s Panama branch, according to rating agencies, with the debt transferred there after it receives an operating license. The securities will likely be recognized by Peru’s regulators as Tier 1, says Fitch, which assigns 100% equity credit. Bank of America Merrill Lynch and JPMorgan are managing the sale, rated Ba3/BB. Interbank’s last dollar issue was a $121m 2016 MT100 bond sold last year.