Latin Finance - July 2008 - (Page 7)

M&A Telmex Hits Acquisition Trail The successful spinoff of Telmex Internacional is expected to lead to acquisitions by the newly independent holding company. The $16 billion Mexican spinoff is eyeing Telecom Argentina, Brazil’s Global Village Telecom and Chile’s Grupo GTD, according to bankers familiar with the company. The first two are said to be most actionable in the short term. “It’s going to be an acquisition machine, just like América Móvil was when it was spun off from Telmex,” says a banker close to the corporate. Telmex Internacional is understood to be the largest spin-off ever done in LatAm, and the shares traded up. The deal was designed to allow the international and domestic units to each focus on their respective business and core geographic operations, thereby boosting competitiveness. Telmex Internacional, which has a strong net cash position, Brazilian meat packer Marfrig has purchased Illinois-based OSI will focus on delivering high organic Group’s businesses in Brazil and growth, and says it will pursue Europe for $680 million. The buyer M&A Rank by Volume, Year to June 23 acquisition opportunities throughout could shell out an additional $220 Credit Suisse on a Roll LatAm wireline voice, video and data million depending on future Rank Advisor Value $m # deals markets. The separation was advised performance of the European 1 Credit Suisse 30,983.40 15 by Lehman. business, according to Marfrig. The 2 Rothschild 20,933.33 13 acquisition includes three Brazil3 Morgan Stanley 16,205.03 11 based assets: Braslo, a meat 4 Citi 15,316.48 9 processor, and Agrofrango and Aiding the bouyant M&A trend is an 5 JPMorgan 14,797.84 11 Penasul, which specialize in poultry. influx of private equity money. New 6 UBS 11,840.93 11 In Europe, Marfrig gets poultry York-based PE firm Kohlberg Kravis 7 Goldman Sachs 9,964.02 2 processor Moy Park Group, which has Roberts (KKR) is heard to be looking 8 Banco Itaú 8,499.91 2 operations in Northern Ireland, to hire and establish a Brazil 9 Lazard 3,254.07 3 England, France and the presence, according to São Paulo10 Jefferies 2,100.00 1 Netherlands. Frozen foods producer based executives. “They’ve been Subtotal 48,455.76 49 Kitchen Range, based in the UK, and poking around for months now,” says Total 75,654.50 585 Dutch frozen food processor Albert a person familiar with the situation. Van Zoonen are also part of the KKR says it has invested a total of Source: Dealogic European sale. $39 billion in assets now valued at Elsewhere, Canadian private $86 billion. It invests from a $17.6 equity fund Ontario Teacher’s Pension Plan (OTPP) and billion fund, closed in March, and capital for Brazil deals is Morgan Stanley Infrastructure (MSI) have won an auction for expected to come from that vehicle. A KKR official declined to SAESA, a Chilean electrical energy company, by bidding comment. roughly $870 million. Meanwhile, Crescent Asset Management is seeding a The financial buyers beat out strategics in the transaction, dedicated LatAm PE fund it hopes to grow to $500 million by which also involves the assumption of $400 million in debt. the end of the year. “There actually is some very strong interest Chilean utility holdco Enersis, as well as Colombia’s EPM are from the Middle East in investing in Latin America,” Crescent heard to have been among the losing bidders. New JerseyGroup CEO and principal Paul Homsy tells LatinFinance. “One of the challenges coming out of the Gulf is finding a home for all based PSEG, the owner of SAESA, says the divestiture is part of an overall strategy to reduce holdings around the globe. this money.” The new Sharia-compliant vehicle seeks annual returns over PSEG’s remaining Latin assets consist of stakes in Generation plants in Venezuela. 20% and will cater to the Middle East preference for shorter Credit Suisse advised PSEG on the sale, while Dresdner lock up periods, of around five years with 1-2-year extensions, worked with OTPP. Morgan Stanley advised MSI. LF according to Homsy. What makes LatAm particularly attractive versus developed market PE is the Islamic buyside’s aversion to leverage. “You can’t have, say, more than 30% debt to total UPDATE enterprise value of a portfolio,” says Homsy. Leverage is For daily M&A news see www.latinfinance.com relatively low throughout LatAm. The entity will take cash from Middle East-based institutional and high net worth retail investors and seek opportunity in LatAm alternative energy, infrastructure, natural resources, distribution industries and retail. This should cater to Islamic principles which prohibit investment in conventional banks, insurance companies, alcohol, tobacco, firearms and entertainment. Crescent aims to take a controlling or significant minority interest and uses local partners like Chile’s Moneda Asset Management to aid it on the ground. Homsy also anticipates a wave of acquisitions in LatAm of banks by Middle East commercial financial institutions. “To compete with the large international banks, these guys have to go global too.” Crescent also has a $1 billion global fund that includes allocation to LatAm. Marfrig Buys OSI Assets PE Cash Moves In July/August 2008 LATINFINANCE 7 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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