Latin Finance - January/February 2012 - 46

sees a 10.3% discount in the price paid for Elektro, as well as signiﬁcant discounts for the others in the deal. Iberdrola led a group of buyers which took the rest of the assets. USbased Sempra Energy took a 50% stake in Chile’s Chilquinta and a 38% stake in Peru’s Luz del Sur for $875 million. Pampa Energía, Argentina’s largest electricity company, paid $276 million for a 77.1% share of Argentine power distributor Emdersa, a 90% stake in northern Buenos Aires power supplier EDEN, and the rights to Compañía de Inversiones de Energia, CIESA, holder of 55% in Transportadora de Gas del Sur. Also on the list of investors, Colombia’s Empresas Públicas de Medellín purchased 86.4% of the San Salvador-based DelSur electric utility company, as well as 51% of Panamanian utility company ENSA for a total of $200 million. Finally, Empresa de Energía de Bogotá, took 60% of Peruvian natural gas distribution company Calidda for $111 million, and teamed up with three other partners to buy a 52.1% stake in Colombia’s natural gas transport company Promigas for $790 million. “It really was a pan-regional transaction,” says Itaú’s Pedro Garcia. The AEI deal not only opened Brazil’s door to Iberdrola, but it also helped propel the continued consolidation in the Latin American power sector, he says. “The deal may have even helped accelerate it,” Garcia says. “There is still more room for consolidation.” LF

Domestic M&A
Banorte-IXE

Leaping to the Top
y the time Grupo Financiero Banorte and Ixe Grupo Financiero merged in November 2010, the Mexican ﬁnancial sector was already dominated by foreign banks. Banorte was the fourth largest bank in the system by assets and Ixe, a

ﬁnancial institution catering to the wello , was eighth in that scale – two smaller players amid titans. Spanish-owned BBVA Bancomer occupied the top slot and the Citigroup-owned Banamex followed closely behind, each with more than $88 billion in assets, almost twice the size of Banorte. So the $1.3 billion deal that Ixe and Banorte struck was all the more signiﬁcant. Not only was it the largest ﬁnancial merger the country had seen in at least a decade, but it also created a new domestic champion, making the newly named Grupo Financiero Banorte-Ixe into the third largest bank with combined assets of $54.3 billion. “The transaction was yet another example of local players in the ﬁnancial sector seeking scale,” says Moises Mainster, managing director at JP Morgan, an advisor to Ixe on the deal and a shareholder in the bank. Banorte was advised by Strategic Advisors and Estructura Partners. As structured, the merger involved the issuance of 308 million Banorte shares to purchase shares of Ixe at a rate of 0.389 to 1. The transaction suggested an implied valuation of a price to book of 2.3 times. This left Ixe shareholders with a 13.2% stake in a new holding entity with combined earnings of $488 million and one that stood to gain further from complementary business lines. Banorte, known as a mass-market bank, boasted respectable operations in the country’s capital city, a strong presence in the north and a full suite of ﬁnancial services from insurance to retirement funds. The bank also has a US presence in Texas, New Jersey and California, states from which large communities of immigrants send remittances back to Mexico. The publicly-listed Ixe catered to a wealthier clientele. Its strength lies in lending to businesses through retail and commercial banking, but it also o ered the combined ﬁnancial ﬁrm an established asset management unit as well as mutual fund, brokerage and investment banking arms. The limited overlap between their business lines added to the appeal, with a potential for operating cost synergies

estimated at the time between 5% and 6% within the ﬁrst year of operations. With the beneﬁt of hindsight, the merger could end up positioning BanorteIxe to beneﬁt from opportunities in Latin America’s banking sector that may result from Europe’s trying ﬁnancial woes. “LatAm is growing, even in the midst of a negative world situation,” says JPMorgan’s Mainster. “You have well-capitalized locals who can buy domestically or abroad. They’ve got the capital and the balance sheet to do so.” Under such a scenario, Mainster points out, banks such as Banorte-Ixe could now take advantage of opportunities created by multinational banks, leaving the region in response to ﬁnancial strains in their home markets. LF

AA2000’s $300m 10.75% 2020

Structured Financing

Solid Structures
A
eropuertos Argentina 2000 (AA2000) proved that a solid structure can make all the di erence when selling to a wary investor base. Its $300 million receivablebacked 10-year non-call ﬁve may have been relatively small, but it lured a large crowd and still outperformed in the secondary markets at a time when other Argentine credits headed south. Long in the works, the mandate for the Argentine airport concessionaire’s international bond debut had been tossed around from bank to bank until it landed in the laps of Credit Suisse and Morgan Stanley, which eventually got the deal to ﬂy by incorporating elements from a variety of structures, including DPRs and a similar trade from Lima Airport Authority. Selling an Argentine credit is arguably never easy, but an AA2000 trade was further complicated by the company’s reliance on the goodwill of a government which awards airport concessions and regulates tari s. While AA2000 was considered a strong name with a virtual monopoly in this sector as it manages 33 of the country’s

46 LATINFINANCE

January/February 2012

Latin Finance - January/February 2012

Table of Contents for the Digital Edition of Latin Finance - January/February 2012