LQIF raises $817m from Banco de Chile stake amid troubled market

LQ Inversiones Financieras booked CLP448.9bn ($817m) from its sale of 6.7m Banco de Chile shares on Tuesday, in spite of a rocky market backdrop. Heavy local support underpinned the transaction, although for international accounts bidding for the paper, the decision proved challenging as stock markets fell and as equity funds saw continued outflows. LQIF sold the shares at CLP67 each, after investors placed around CLP1.2tn in orders. Local pension funds bought 43% of the deal, despite being the group that was scaled back most heavily — they were prorated by 73.2%. Other Chilean institutional investors bought 18% of the deal, and retail accounts, 9%. International investors bought 3% of the sale in local shares, prorated by 64.1%, and a further 27% was subscribed in American Depositary Shares. The price came at a 1.9% discount to Tuesday’s CLP68.32 close, and much less than the CLP74.38 level where Banco de Chile’s stock was trading on January 9 when the deal was announced. The share price drop followed sharp falls in stocks across the emerging markets, hit by political and financial instability in several countries as well as unsettling economic data from China. Pain in equity markets has been exacerbated by fund outflows, also. Investors had taken $550m out of dedicated LatAm equity funds in the year to January 22, and withdrew $8.87bn from such funds in 2013, according to data from Barclays. One ECM banker highlighted, however, that those figures obscure a bias for investors to move money away from Brazil and into other parts of the region. The Banco de Chile equity sale cuts LQIF’s ownership to 51%, from 58.4%, of the firm. Citi was global coordinator, and Bank of America Merrill Lynch, BTG Pactual, and Deutsche Bank were bookrunners. Banco de Chile is the country’s largest lender with a 19.3% market share. It reported assets of CLP25,261bn ($50.1bn) at the end of the third quarter.