Cement Maker Set for IPO

Brazil’s Cimentos Liz is scheduled to price an IPO today that could top BRL600m. The cement maker plans to offer 47.7m primary shares, at BRL10-BRL13 each. A 15% greenshoe and 20% hot issue are also possible. The deal would raise BRL630m if done at the BRL11.50 midpoint, assuming the greenshoe is exercised, and BRL713m if done at the top. The deal comes as new issuance announcements have picked up – a BRL500m Brazilian IPO from T4F, a $1bn IPO from Arcos Dorados and a BRL5bn follow-on from Gerdau are all coming soon. YPF’s performance, pricing at a 2.3% discount last week and trading up since, is seen as encouraging for the region’s larger issuers. However, Liz will hope to perform better than other small Brazilian deals have recently. International Meal Company was the latest to scrape the bottom of its price range at the beginning of March, and others have had to reset their price ranges. “Nobody wants to pay a valuation above a company’s future projects,” says a buy-side analyst at a Sao Paulo asset manager looking at the deal. He notes the price might seem high given Liz’s current size, though he sees the price as slightly more reasonable when considering the company’s expansion plans – a situation characteristic of many smaller IPOs this year. Liz has operations in the states of Sao Paulo and Minas Gerais, and is raising funds for expansion ahead of increased construction needs in anticipation of the 2104 World Cup and 2016 Olympics. It plans to use proceeds to improve and expand its plant and pay down debt. Liz recorded Ebitda of BRL79.7m in 2010, up from BRL49.8m in 2009. It is 100% owned by the Tracao holding vehicle for the founding Champalimaud family, which could see its stake reduced to as little as 66.5%, according to regulatory documents. BTG, Itau and JPMorgan are managing the sale. Also, Banco de Chile is scheduled to announce today the pricing for its equity follow-on, following closing of the offer period yesterday. The 1.4bn share follow-on would