Latin Finance - April 2008 - 6

Equity Managers Get Defensive A quarter of the year has passed and LatAm’s new issue equity calendar has remained dormant, save for a handful of followons from issuers with urgent financing needs and little price sensitivity. Senior equity bankers in Brazil – one of the busiest markets globally in 2007 – say they will be lucky to reach a third of last year’s volume in 2008 and the outlook is similarly dire for the rest of the region. Arminio Fraga, founder of Brazilian hedge fund Gávea Investimentos, has a decidedly defensive approach to managing his investors’ money. “This is a tricky year and it will stay that way for awhile,” says Fraga, whose fund manages $3 billion, in a February interview. “I’m expecting we’ll see a substantial amount of volatility over the next few quarters.” The portfolio manager recommends taking a deeper fundamental approach versus relying on short-term market moves. Exotic Vision Vision, the São Paulo-based asset manager, is planning to sell equity in productive land assets, potentially through both the public and private markets. It has mandated a bank to bring a first tranche this year, says Amaury Junior, founder of Vision. Banks who pitched the deal in February said it would fetch $800 million to $1.7 billion, according to Junior, who predicts that it is worth more than $1 billion. “We have several banks proposing IPOs of our portfolio, transforming them into a company,” says Junior. The lead, which Junior declines to name, is committing prop money to the deal. A first phase of equity issuance is planned by the third quarter and may go private, depending on market conditions. A public issue is anticipated mid-2009 and the issuer will be an agricultural land development company. Besides land that Vision owns, the assets include revenue from operators – producers of cattle, ethanol and biofuels – who rent it, and financing to them. “It’s more than real estate,” says Junior. “There’s a carry that is very attractive out of the renting and finance – on top of that I have the potential land appreciation,” he adds. YPF Plots Jumbo YPF, the Argentine subsidiary of Spain’s Repsol, plans to raise up to $3.75 billion through the sale of secondary shares. The sale is part of a long-running plan by Repsol to reduce Argentina exposure. The sale of up to 25% of the company, which values itself at roughly $15 billion, will take place on both NYSE and the Buenos Aires Stock Exchange, with up to $3.1 billion of the total to be listed as ADS on the former, according to a filing with the SEC. YPF stock is very thinly traded, with only 393 million shares outstanding in total, according to Dealogic. That makes this offering more akin to an IPO than a follow-on, says a banker familiar with the deal. Another ongoing divestiture process for YPF comes in the form of a sale of up to an additional 25% of its shares to the Petersen Group, an Argentine private equity consortium. Credit Suisse, UBS, Goldman and Itau are leading, with BNP acting as financial advisor to YPF. Cresud Completes Cresud, the Argentine holding company for IRSA and a number of agricultural assets in Brazil and the Southern Cone, has completed a rights offering with existing investors that grossed it $288 million through the sale of 180 million shares. The deal saw strong demand from existing shareholders, which meant new investors could not participate in the offering, Alejandro Elsztain, CEO, tells LatinFinance. Some 60% was distributed in the form of ADS at $16, while the remainder was sold in the form of locally listed stock, at 5.04 pesos. Both the ADS, which represents 10 local shares, and each local share also carry a warrant that permits holders to buy an additional share at a 5% premium. “People are very interested in our track record with commodities. There are a lot of funds talking about investing in agriculture and commodities now, but we have the experience to show for it,” says Elsztain. Proceeds are being used push into new markets, including Bolivia, Paraguay and Uruguay. Citi, Deutsche and Raymond James led the offering. Gerdau Approves Sales Among the more promising offerings so far this year is Gerdau’s planned follow-on of primary shares, expected to generate over $2 billion in proceeds. The deal is scheduled for the last week of April, say bankers on the deal. Gerdau is looking to rebalance its capital structure and build up a war chest, probably for more acquisitions, say the bankers. Gerdau will sell ordinary and preferred shares via Itaú BBA. Meanwhile, Brazil’s Anhanguera Educacional, a for-profit education company based in the state of São Paulo, plans to raise more equity capital through a mix of primary and secondary shares. The company, which raised $242 million in a March 2007 IPO, has already spent the proceeds, and is coming back to replenish coffers, says an executive close to the deal. Credit Suisse, Merrill Lynch and Santander will lead. Elsewhere, Solvay Indupa, a petrochemicals company headquartered in Buenos Aires and São Paulo, plans an IPO on the Bovespa by listing Brazilian depository receipts (BDRs) through UBS. Brazil’s Norcon has also filed to sell shares on the Bovespa via Credit Suisse. Casualty Room Brazil’s Globex Utilidades abandoned a planned secondary public offering, citing poor market conditions. The electronics retailer and owner of the Ponto Frio brand had not indicated the size of the offer announced in December, through which it had hoped to migrate shares to the Bovespa’s Novo Mercado. Credit Suisse, Goldman Sachs and Unibanco were to manage the sale. Brazilian Finance and Real Estate also pulled a primary offering for the same reason. A source close to the deal says it was aiming for 500 million reais. Credit Suisse was to lead. LF 6 LATINFINANCE April 2008

Latin Finance - April 2008

Table of Contents for the Digital Edition of Latin Finance - April 2008

Latin Finance - April 2008
Contents
Brazilian Real Estate
Mexican Mortgages
Peruvian Mining
Brazilian Iron Ore
Banesco Expansion
Banco Industrial Strategy
Trinidad Power
Dominican Republic
Tourism Finance
Corporate Travel Guide
Mid-Cap Banks
Inside Source
Parting Shot
Latin Finance - April 2008 - Latin Finance - April 2008
Latin Finance - April 2008 - Cover2
Latin Finance - April 2008 - Contents
Latin Finance - April 2008 - 2
Latin Finance - April 2008 - 3
Latin Finance - April 2008 - 4
Latin Finance - April 2008 - 5
Latin Finance - April 2008 - 6
Latin Finance - April 2008 - 7
Latin Finance - April 2008 - 8
Latin Finance - April 2008 - 9
Latin Finance - April 2008 - Brazilian Real Estate
Latin Finance - April 2008 - 11
Latin Finance - April 2008 - 12
Latin Finance - April 2008 - 13
Latin Finance - April 2008 - 14
Latin Finance - April 2008 - Mexican Mortgages
Latin Finance - April 2008 - 16
Latin Finance - April 2008 - 17
Latin Finance - April 2008 - Peruvian Mining
Latin Finance - April 2008 - 19
Latin Finance - April 2008 - Brazilian Iron Ore
Latin Finance - April 2008 - 21
Latin Finance - April 2008 - Banesco Expansion
Latin Finance - April 2008 - 23
Latin Finance - April 2008 - Banco Industrial Strategy
Latin Finance - April 2008 - 25
Latin Finance - April 2008 - Trinidad Power
Latin Finance - April 2008 - 27
Latin Finance - April 2008 - 28
Latin Finance - April 2008 - Dominican Republic
Latin Finance - April 2008 - 30
Latin Finance - April 2008 - 31
Latin Finance - April 2008 - 32
Latin Finance - April 2008 - 33
Latin Finance - April 2008 - Tourism Finance
Latin Finance - April 2008 - 35
Latin Finance - April 2008 - Corporate Travel Guide
Latin Finance - April 2008 - 37
Latin Finance - April 2008 - 38
Latin Finance - April 2008 - 39
Latin Finance - April 2008 - 40
Latin Finance - April 2008 - 41
Latin Finance - April 2008 - 42
Latin Finance - April 2008 - 43
Latin Finance - April 2008 - 44
Latin Finance - April 2008 - 45
Latin Finance - April 2008 - 46
Latin Finance - April 2008 - 47
Latin Finance - April 2008 - 48
Latin Finance - April 2008 - Mid-Cap Banks
Latin Finance - April 2008 - 50
Latin Finance - April 2008 - 51
Latin Finance - April 2008 - 52
Latin Finance - April 2008 - 53
Latin Finance - April 2008 - 54
Latin Finance - April 2008 - 55
Latin Finance - April 2008 - 56
Latin Finance - April 2008 - 57
Latin Finance - April 2008 - 58
Latin Finance - April 2008 - 59
Latin Finance - April 2008 - 60
Latin Finance - April 2008 - 61
Latin Finance - April 2008 - Inside Source
Latin Finance - April 2008 - Parting Shot
Latin Finance - April 2008 - 64
Latin Finance - April 2008 - Cover3
Latin Finance - April 2008 - Cover4
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