LQIF moves ahead with Banco de Chile sale despite stock market tumble

Leads closed books Monday on LQ Inversiones Financieras’ sale of 6.7bn shares in Banco de Chile, pushing ahead with the deal despite a sharp dive in equity markets. Global coordinator Citi and bookrunners Bank of America Merrill Lynch, BTG Pactual, and Deutsche Bank are set to price the transaction today. A fall in markets means the deal is likely to raise less for LQIF than initially anticipated. Banco de Chile’s American Depositary Shares — equal to 600 common shares — closed at $76.50 on Monday, down from $83.65 the day LQIF announced the sale. The share sale will trim LQIF’s holdings in the Chilean lender to 51%, from 58.4%. Banco de Chile, the country’s largest lender with a 19.3% market share, reported assets of CLP25,261bn ($50.1bn) at the end of the third quarter. Its falling share price echoed a trend across markets more broadly. Chile’s IPSA stock index closed at 3,520 on Monday, down 2.14% on the day and 4.71% on the year, as investors reacted to an abrupt devaluation in the Argentine peso last week as well as weak economic data from China and concerns over political unrest in other global emerging markets. Chris Palmer, equity portfolio manager at Henderson Global Investors in London said that the long-term impact of the recent market volatility would depend on how quickly policymakers responded by addressing fundamental economic problems. But he added that some longer-term trends were likely to continue to plague markets. “Some of the triggers for what kicked all this off — the tapering by the Fed and some inconsistent data from China — have got investors nervous. Those two things are unlikely to change this year,” he said. “The drivers of China’s economy are changing. The incoming government has some different ideas about how the growth model should work. … That’s not going to go away this year.” Aside from a handful of deals already mandated, sales of new equity by Latin American companies are expected to be minimal in the first quarter, said one ECM