ECM Deals Line Up

Several would-be equity issuers are eager to capitalize on the improved market sentiment seen last week, though conditions may be trickier than in the DCM, bankers say. A handful of issuers are expected to test the waters in the September-October pricing window, likely also encouraged by Volaris, which priced a $400m IPO last week at the bottom of the range but has seen strong secondary trading since. “With Volaris and with the Fed announcement, people are refocusing on trying to launch before 2Q numbers go stale. The pipeline is moving again,” says one ECM banker, cautioning that the drop in the Bovespa and Bolsa Thursday and Friday means the rally may not be as strong as hoped. After sounding out investors last week, Brazilian iron parts maker Tupy is expected to launch as soon as this week. The follow-on should target BRL1bn ($452m). Brazilian transportation management company Sascar should also launch an IPO as soon as this week, though peer Ouro Verde is heard choosing to sit out this window. Education specialists Ser Edcucacional and Anima Educacao are heard planning to follow, also launching IPOs as soon as this month. Outside of Brazil, Chile’s Geopark is in the pipeline and heard close to launch, and Avianca has filed ahead of a launch that could also come before the end of the month. Not all issuers will find it easy, however, as meeting equity investors’ expectations remains challenging even when markets are up. “There are still some valuation gulfs in a number of situations,” says one ECM banker with a few Brazilian deals waiting to go. LatAm equity issuers had raised $27.54bn through Friday from 60 deals, up from $11.85bn from 50 in the corresponding period of 2012, according to Dealogic data. Very little separates the top three bookrunners by volume this year, with Itau ($3.14bn) just ahead of Credit Suisse ($3.09bn) and BTG Pactual ($2.96bn).