Category: Peru

Canadian miner Rio Alto Mining says it has exercised an option to acquire the La Arena fold oxide project in Peru from peer Iamgold for CAD49m in cash. A Rio Alto spokeswoman says the cash comes from a private placement completed on January 20, in which it issued 28.00m common shares at a price of CAD2.05 per share, raising CAD57.50m. The shares were sold by a syndicate of underwriters led by GMP Securities and including Scotia, Clarus Securities and Stonecap Securities. In 2009, Iamgold entered into an option and earn-in arrangement with Rio Alto on the La Arena property. La Arena is expected to begin production in the second quarter of this year. Under the agreement, Rio Alto had an option to acquire 100% of Iamgold’s interest in the property. Iamgold, also based in Canada, says it will use the proceeds to strengthen its financial position and finance the development of its core assets.

Israel-based pharmaceutical company Teva is selling Peruvian pharmacy chain Botica Torres de Limatambo (BTL), say investment bankers off the deal. Ivax, which Teva acquired in 2006, had purchased BTL in June 2004 from Peru’s ASSA Investments for about $10m, according to SEC filings. A banker in Peru says BTL has grown significantly since then and is now among the top 5 pharmacy chains in the country, with a market share of about 10%. Peru’s pharmacy market is around $1.1bn in size. Another banker off the deal says Interbank, which recently acquired Inkafarma, is a potential buyer. “If Interbank were to merge BTL with Inkafarma it could end up with a 40% market share,” he says, adding that Teva is not using any financial advisors. A Teva spokeswoman says the company does not comment on market rumors. The news comes a day after Teva announced it was acquiring Peruvian drugmaker and marketer Infarmasa for an undisclosed price from private equity firms Altra Investments and The Rohatyn Group. The latter are said to have achieved a return on investment of over 30%.

The Interbank Group has acquired Inkafarma, a Peruvian pharmacy chain, in a stock-swap transaction. Inkafarma says it has a 30% market share of the $1.1bn Peruvian pharmaceutical market. Although Interbank has not said how much it paid for the chain, local press reports estimated the deal value at $320m.

Toronto-listed miner Vena Resources, which operates in Peru, says it is planning to issue units at CAD0.50 each and sell them via a private placement, with each unit consisting of a common share and half a common share purchase warrant. Each warrant will entitle the holder to purchase 1.00 common share of the company at a price of CAD0.75 per warrant share. Vena has not determined how much money it intends to raise. Canadian investment bank M Partners and Celfin’s Peru office are handling the issue. A banker at Celfin says a roadshow has begun and will probably end within the next 3 weeks. Institutional investors in Chile, Peru, Colombia and abroad are being contacted, he says. The amount of units and funds Vena finally decides to raise depends on investor demand, the banker says. Ricardo Carrion, MD for capital markets at Peru-based Kallpa Securities, says that Vena’s most advanced project, the Azulcocha zinc project, will require between $15-$30m to bring to production. Separately, Vena has announced that it is reviewing strategic options for the 75% stake it holds in its uranium subsidiary Minergia, including a spin-off. A study Kallpa performed in 2010 valued Minergia at around $18m, Carrion says, noting that the value may have increased as uranium prices have appreciated. Website UXC.com, which tracks uranium prices, says the price per pound of uranium, priced at $68 per pound on January 25, is up 70% since June. Carrion believes a spin-off would be positive for Vena, as investors are seeking to invest in specific commodities rather than in a company that exposes them to a combination. He predicts that this could become a trend among companies that mine different metals. Among companies in Peru that could explore spinning off units to unlock their full value, he says, is Zincore Metals. “The company’s focus is zinc, but about a year ago they found copper deposits in one of their properties. it would make sense for them to spin the copper deposits into a separat

Banco de Credito del Peru BCP is heard to be in the syndication process for a $100m 3-year loan, according to bankers with knowledge of the transaction. Bank of Tokyo-Mitsubishi and Bank of Taiwan are said to be leading the deal, which is being syndicated to Asian lenders, according to market participants. BCP closed a 350m 3-year syndicated loan in October 2010, priced at 175bp over Libor, which it upsized from an original $300m. Participation came from Latin America, Europe, the US and some Asian banks, and the loan was for general corporate purposes, in particular to fund loan growth.

Peru’s central bank is expected to keep its rate at 3.00% today. “The central bank is likely to take comfort in the near term from benign inflation data and slowing economic growth to keep rates on hold,” says Morgan Stanley. Barclays agrees and adds that a hike could take place in March, depending on inflationary conditions. Annual inflation in December came in at 2.08%, at the midpoint of the target range, according to the central bank.

Grupo Rodriguez Pastor has acquired a 60% stake in Inmobiliaria Milenia (Inmisa). According to a banker on the deal, the Peruvian conglomerate, which owns financial group Interbank and retailer Supermercados del Sur, acquired the stake in the real estate company for about $33m equivalent via an auction on the local Bolsa. Sociedad Agente de Bolsa Inteligo, another subsidiary of the conglomerate, represented the buyer. Another 30% was acquired by Continental Bolsa at PES5.16 per share. Inmisa workers, who were also represented by Inteligo, took the remaining 9% also at PES5.16 per share, says another banker on the deal. He notes that the seller, government controlled investment fund Fonafe, had established a base price of PES5.06 per share, or about $42m, and that the price paid by the buyers is 2.4x that price. Celfin handled the sale.

The Cheves hydropower plant in Peru, a 168MW greenfield project, will get up to $250m financing through the IFC, in the form of an A/B loan. Up to $70m will come from the IFC, while up to $180m will come from international banks. The IFC says this is its first investment in Peru’s power-generation sector. Banks participating in the B loan include DnB NOR Bank, Nordea Bank, Societe Generale, and WestLB. Cheves will produce around 836 gigawatt hours of electricity per year, starting in 2014.