Market Troubles Claim ECM Victim

Votorantim Cimentos has postponed a BRL8.0bn ($3.7bn) IPO, according to people following the sale, due to rough market conditions. US Treasury volatility and EM selloffs have meant the cancellation of many bond deals in recent weeks, and Votorantim – offering what would be one of the year’s biggest IPOs – was to be a test for the new equity issue market. “The demand didn’t seem to be there for them to get the minimum amount,” says a US-based investor contacted Tuesday about the deal, joining others in characterizing the valuation sought as aggressive. Bankers and investors note that many of the follow-on sales could still get done even if IPOs are prohibitive, especially if pricing expectations are lowered. The cement business of Brazil’s Votorantim conglomerate was planning to price 286m primary units and 114m secondary units today at BRL16.00-BRL19.00 each, according to a prospectus, meaning a BRL8.05bn sale at the midpoint if a 15% all-primary share greenshoe was included. The issuer always faced skepticism over the valuation it expected, with the BRL8bn size less than the seller initially intended. The transaction was to include a Brazilian tranche and a US ADS tranche expected to make up at least 10% of the sale. The secondary shares were to be sold by controller Votorantim Industrial. Votorantim Cimentos was seeking funds to use 45% of the primary proceeds for organic expansion and acquisitions, 40% for working capital and 15% for investments to improve existing operations. BTG Pactual, Credit Suisse, Itau, JPMorgan and Morgan Stanley are the global coordinators on the transaction, with Banco do Brasil, Banco Votorantim, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and HSBC as bookrunners. City Hoteles squeaked out an IPO at the bottom of its range last week, but the fate of others in the pipeline – Azul, Volaris, CPFL Energia – is unclear. The next LatAm equity transaction scheduled is a MXP8.0bn ($621m) follow-on from OHL Mexico Thursday.