Former Merrill Lynch LatAm chairman Carlos Gutierrez is joining the rush to Mexican private equity following changes to the rules that allow participation by the country’s pension funds. He is 50% owner of Artha Capital, a Mexico-based start up in partnership with German Ahumada, former CEO of Consorcio Ara. The fund aims to raise MXP2.5bn this year locally to target real estate investment and recently conducted meetings with local pension fund managers, Gutierrez tells LatinFinance. “We’re in the process of raising cash in the next few months,” says the former banker. “We did a non-deal roadshow and the response was very positive.” Gutierrez says returns will be in line with international standards – which for PE, typically means 20%-30% a year – and says the fee structure will also be similar to foreign norms. Artha intends to list a fund on the bolsa this year and issue debt via private placement, with proceeds used to will buy large plots of land throughout Mexico for housing, tourism, industry and business. Artha joins a flurry of new entities hoping to tap Afores for long-term investments. Mexico’s pension funds, which had close to $90bn equivalent in assets under management as of end-2008, have tended to invest in short term government paper. The new PE vehicles hope to exploit this asset/liability duration mismatch to raise cash for projects that are benefiting from the Mexican government’s focus on infrastructure. The recent success of Red de Carreteras de Occidente in the Certificados de Capital de Desarollo market looks set to pave the way for a full pipeline of similar deals.
Category: Regions
IDEAL Lands North Pacific Concession
As expected, Mexico’s IDEAL has won the North Pacific highway package, also known as Farac II, the government says. The construction and engineering company controlled by Carlos Slim bid MXP3.22bn, the highest in a field that also included Spain’s Global Via with ICA in consortium, and Spain’s OHL alone. The 30-year concession will require MXP3.7bn-MXP4.0bn in investment and includes an existing 181.5km toll road connecting Culiacan, Sinaloa to Mazatlan, and bypasses in each city to be built. Banobras and the Fonadin national infrastructure fund are set to provide senior financing for the deal. Bids on a third toll road package in Tamaulipas are due in November. The North Pacific package is the first to be tendered in a set that was offered together earlier this year – and also known as Farac II – but cancelled it after the government said bids fell short of the minimum requirements. Bids on a third toll road package, in Tamaulipas, are due in November.
StanChart Unveils Sales and Trading Hires
Standard Chartered has appointed sales and trading personnel to boost coverage for Americas clients with trade and investment in its core markets of Asia, Africa and the Middle East. Two ex-Lehman bankers join former colleague Mohammed Grimeh, head of global markets for the Americas at Standard Chartered. The bank has tapped Michele Nicoletta as head of credit trading, Americas. She was most recently head of EM credit trading at Barclays in New York, and prior to that, at Lehman. John Buchanan was appointed director of credit trading from Barclays, where he ran the EM hybrid and structured credit book. Jean-Yves Amouroux was hired as a senior trader, structured products and exotics from Nomura. In sales, Harvey Black was appointed head of investor sales for the Americas. He was previously at Forum Asset Management and before that, head of EM sales at Bank of America. And Hugo Faria has joined as head of structuring for Americas. He was most recently with UBS, where he was head of EM structuring for the Americas. Meanwhile, EM distribution specialist Marcy Swank has joined as a director in credit sales. And Nilson Strazzi has joined Standard Chartered as head of LatAm banks sales, also from Barclays. In capital markets, Alexis Lasser joined from Barclays as head of illiquid and private placements, with a mandate to drive growth in private capital market transactions. She is also ex-Lehman. And EM expert Russell Ashcraft has joined as head of US bond syndicate, focusing on cross-border bond business. He was previously at RBS.
Pan American Makes Offer for Aquiline
Vancouver-based Pan American Silver Corp, which has operations in Mexico, Peru, Argentina and Bolivia, is making a friendly take-over offer for Aquiline Resources, which operates in Argentina and Peru. The offer is valued at CAD626m and will be made on the basis of 0.2495 of a Pan American common share, plus 0.1 of a Pan American common share purchase warrant for each Aquiline common share, the buyer explains. Pan American’s financial advisor is Goldman Sachs and its legal counsel is Borden Ladner Gervais and Skadden, Arps, Slate, Meagher & Flom. Vancouver-based Aquiline’s financial advisor is BMO Capital Markets and its legal advisor is Fogler, Rubinoff.
Mexico’s Mabe Hits Road with Bond
Mexican domestic appliance maker Controladora Mabe is preparing a dollar bond. The deal should be a $300m 2019, according to ratings reports assigning a BBB- mark. A US and European roadshow is set to begin Friday in London, visit New York and Boston, before finishing on the US West Coast Wednesday if necessary. Bank of America-Merrill Lynch and HSBC have been hired to manage the sale. Mabe plans to use proceeds to refinance debt. The issue would be Mabe’s first since a $200m 6.5% 2015 sold in 2005 through ABN and Citi. General electric owns 48.4% of Mabe, and is also a JV partner for supplying ranges, refrigerators and other products in the US market.
Gas Natural Heard Selling Mexico Power Pack
Spain’s Gas Natural is heard to be selling a collection of Mexican assets acquired from France’s EDF 2 years ago. Consortia are teaming up to bid on the bundle of power assets that LatAm bankers say is worth over $1bn. Gas Natural acquired the package, which includes 5 combined-cycle gas-fired plants totaling 2,233MW, the operating company Comego, and the 53km Gasoducto del Rio pipeline, for $1.45bn in October 2007. The deal was financed through debt, with JPMorgan advising Gas Natural and UBS helping EDF. Gas Natural, which earlier this year merged with Union Fenosa, is heard to be divesting the Mexico assets to rebalance its portfolio. It acquired a preponderance of Mexico-based assets through the merger, say bankers. Several international bidders from Asia and Europe are understood to be preparing bids. Other bidders heard eyeing the assets 2 years ago when EDF sold to Gas Natural are Suez Energy, Mitsui, and a joint venture between Marubeni and London-based International Power. The ideal purchaser would be a consortium including a combination of financial and strategic operators, says a Mexico-based banker familiar with the situation. The package is expected to be auctioned soon, but the sale process is heard to have hit a snag from Gas Natural’s side, which needs to be sorted out before the process continues. Executives eyeing the process have suggested Gas Natural may not be hiring an advisor for the sale. The plants are called Saltillo, Altamira 2, Rio Bravo 2, Rio Bravo 3, Rio Bravo 4, according to local press reports at the time of the sale in 2007.
Morgan Stanley Revises Peru GDP Forecasts
Morgan Stanley has reduced its 2009 GDP growth prediction for Peru to 0.9% from 1.8%, but increased 2010’s forecast to 4.9% from 4.4%. The shop says that this year, “the economy has proven less dynamic than we had expected, lagging some of its neighbors in pulling out of the downturn. Sequentially Peru has contracted 0.5% in H109, underperforming Brazil (up 0.5%) and Colombia (up 0.5%).” Next year, it believes Peru will post one of the strongest rebounds in LatAm as private investment rebounds. “For 2009 we expect $3.5bn in FDI inflows – an equivalent of near 3% of GDP – . . . in line with the 3.3% of GDP average FDI inflow in the last 10 years,” the shop says adding that for 2010 it expects FDI to increase to at least $5.7bn, or about 4.0% of GDP. Morgan Stanley also improved its 2009 PES forecast to PES2.85 per USD from PES3.2 previously. In 2010, it changed it to PES2.8 per USD from PES2.9.
Nemak Gets 3 More Years
Auto parts maker Nemak has agreed with a group banks to extend the maturity of its debt by 3 years to 2017, it says. Net debt at the unit of Mexican conglomerate Alfa was $1.23bn at the end of Q3. In December, Nemak sought waivers for its financial covenants after taking a hit related to FX-related derivatives, and began negotiations on extending its debt earlier this year.
Telmex Plans Domestic Issue
Telmex is preparing sell up to MXP6bn on the Mexican market, its second local sale this year. The telephone operator is able to place a combination of up to MXP6bn in 2014 floating-rate notes and up to MXP3bn in 2016 floaters. Telmex plans to use proceeds from the sale for general corporate purposes, including debt repayment. Inbursa is managing the sale, rated AAA on a national scale, though another bank may join. In June, Telmex sold MXP8bn in 2011 and 2013 FRNs.
Hidalgo Signs Refinery Land Loan
Mexico’s Hidalgo state has secured a MXP1.5bn 12-year line of credit from Banamex at with a 1-year grace period, the state’s finance secretary Nuvia Mayorga Delgado tells LatinFinance. Proceeds were used to buy land for the $10bn Bicentenario refinery project, which is being run by Pemex, and the rate is 200bp over TIIE. Mexico’s head of public credit Gerardo Rodriguez tells LatinFinance that the funding for the refinery will come from an already agreed capex plan. It will have a 5-6 year construction period, starting in the second half of 2011, says Mayorga. The new refinery will require more than 48,000 construction workers, and the state is looking at creating infrastructure to support that phase. Mayorga says that Pemex chose Hidalgo over other states competing for the project because of its existing support infrastructure. She adds that the cost of operation over the 30-year life of the project was also lower.