Latin Finance - July 2008 - (Page 5)

Equity Hope on the Horizon A spate of June offerings – three IPOs and three follow-ons – sparked hope that the buyside may be returning to LatAm equity new issues, albeit cautiously. If conditions continue to improve LatAm could be in for a pickup in deal activity in the second half of 2008. “The market is showing itself to be quite healthy,” says Evandro Pereira, head of LatAm capital markets at UBS Pactual, which had lead roles in all of last month’s major IPOs. “We saw three deals getting priced within their stated [pricing] ranges in roughly six business days,” he adds. Pereira notes that while not all last month’s transactions were blowouts, they were a far cry from the disastrous offerings of the first quarter. A pickup in the new issue market will depend on global market conditions, say bankers, who add that there are plenty of quality assets seeking equity financing that would make for The Bolsa Mexicana de Valores’ June 12 IPO made less of strong candidates. “The publicly an impression. The flagship $375 available pipeline is somewhat million equity deal for Mexico ECM Rank by Volume, Year to June 23 polluted right now,” says Pereira, priced at the midpoint of a 14.00JPMorgan Hogs the Top referring in particular to Brazil, 19.00 pesos range, but traded where the CVM has a running list of down roughly 8% in the eight Rank Bookrunner Value $m # deals deals under consideration. “There sessions following pricing. Since 1 JPMorgan 3,155.14 5 are lots of things in there that won’t the Mexican new issue equity 2 Banco Itaú 2,927.03 5 make it and other deals that haven’t market is still largely inactive, a 3 Credit Suisse 1,803.00 5 filed yet.” poor aftermarket performance by 4 UBS 1,701.25 4 The banker says he expects at a hallmark issuer is discouraging. 5 Citi 814.52 5 least 15 IPOs in the remainder of the Total proceeds could reach $420 6 Merrill Lynch 403.30 4 year, with a handful of follow-ons. A million if a greenshoe is fully 7 Unibanco 241.47 1 senior ECM banker at another shop exercised. 8 Deutsche Bank 224.83 2 says that if markets improve from The deal led by BBVA and UBS 9 Celfin Capital 215.60 2 June, the number of new issues may still trade up and give 10 Morgan Stanley 201.68 2 could rise well above that. investors a good long-term value Subtotal 11,687.83 20 Through June 23, eight LatAm play. But for the moment it stands Total 12,509.93 24 companies had raised $6.83 billion, as a grim reminder of the perils Source: Dealogic two thirds of which came from local issuers face in that market. Brazilian oil and gas company OGX, In the week following the BMV according to Dealogic. In the corresponding period of 2007 – a and OGX offerings, Genomma, the Mexican laboratory record for Brazil equity – 32 companies had gone public, company, succeeded in raising $202 million by pricing a deal raising $8.67 billion. The figures, which only include IPOs, at 16.00 pesos, the low end of its targeted 16.00-20.00 pesos highlight a 21% drop in total volume but a 75% drop in the range. The issue, led by UBS, Merrill Lynch, Ixe and number of transactions. Santander, was hovering at or just above issue in the ensuing However, overall ECM volume through June 24 is only five six sessions. Proceeds could reach roughly $232 million 8.5% lower than the year-ago period thanks to a series of large if the 15% greenshoe is exercised, which is not a given. follow-ons from the likes of Gerdau and GP Investments in the Bankers on the deal pointed to the fact the deals got first half. done, and within the range, as a triumph as well as a positive indication of where the market may be heading in the second half. LF The record for the largest LatAm IPO, held by the Bovespa for seven months, was smashed June 11 by OGX, the Brazilian oil and gas startup. The $4.1 billion deal is the largest initial UPDATE offering from the region to date, and the company, which was For daily ECM news and an exclusive pipeline of deals see assembled in about a year is also among the youngest to ever www.latinfinance.com go public in LatAm. The offering left the Bovespa’s $3.7 billion and the BM&F’s $3.4 billion IPOs in the dust, and with much less pomp and circumstance. OGX braved unwelcoming market conditions to upsize the offer from an initially rumored $2.5 billion. “Investors are interested in deals that are from the right sector and that come at the right price,” Francisco Gros, chairman of OGX, tells LatinFinance. He adds the book for the IPO, which priced at the top of the range at 1,131 reais, was several times oversubscribed. That, he believes, also contributed to the 14% rise in the first seven trading sessions through June 23, when it closed at 1,290 reais a share. The company’s lead bankers on the deal UBS Pactual, Credit Suisse and Itaú BBA, were also big winners, bagging an estimated $100 million in fees, according to Dealogic. OGX was founded by Brazilian entrepreneur Eike Batista. Mixed Results in Mexico OGX Shatters Records July/August 2008 LATINFINANCE 5 http://www.latinfinance.com

Table of Contents Feed for the Digital Edition of Latin Finance - July 2008

Latin Finance - July 2008 Contents Investment Banking Outlook Compensation Survey Colombia Investment Banking Borrowers vs. Investors Banorte Profile Braskem Financing Strategy Brazil Hydro Finance Peru Port Privatization Panama Money Flows Argentina Local Markets Guide to Banking Technology Who Said That?

Latin Finance - July 2008

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