Latin Finance - July/August 2010 - 7

Equity

Awaiting the Giants

out of Petrobras,” says Nicholas Morse, who manages $8.5 billion in LatAm equities at Schroders Asset Management. In general, if the Brazilian market is performing well at the time of New issuance cooled o in May and June due to volatility in issue, he says, the large volume should not a ect overall market global markets, but it is hoped that two large follow-ons from performance. Brazilian blue-chips will reanimate primary equity. Investors are Follow-ons from M. Dias Branco and Banco Cruzeiro do still largely positive LatAm, and Banco do Brasil and Petrobras Sul, and IPOs from WTorre and Autometal continue to wait for left them making room in portfolios for most of the year. better market conditions and the Petrobras/BdB ﬂood to pass. “Betting against Latin America due to the European JBS was able to squeak in a 1.84 billion real follow-on problems might work in the short-term, but the fundamental just as the volatility hit in late April, pricing at 8.00 reais per problems aren’t there in Latin share a 1.4% discount. BTG led the America,” says Chris Palmer, equity transaction, alongside JPMorgan, ECM Rank by Volume, Year to June 11 portfolio manager at Gartmore, which BAML jumps into second place on in-house deal Santander, Bradesco and BdB. has $2.5 billion in LatAm equity. Rank Bookrunner Value $m # deals “Volatility in Europe can’t stay this 1 Banco Itaú 2,846.57 10 way forever. Latin America will look as Mexico priced its ﬁrst IPOs 2 BofA Merrill 1,758.45 3 it did in 2009, as a good opportunity,” in nearly two years before ECM he adds. 3 BTG Pactual 1,294.71 9 slammed shut. Grupo Chedraui Banco do Brasil (BdB) was set raised 5.23 billion pesos, pricing at 4 Credit Suisse 1,243.63 9 to price a follow-on at the end of 34 pesos per share, the low end of a 5 Bradesco 887.71 7 June, a deal that is expected to raise 32-40 peso targeted range. Banamex 6 JPMorgan 593.04 5 more than 9.0 billion reias. The sale and BBVA Bancomer led the Mexican 7 Santander 546.68 5 includes 286 million primary shares portion of the deal, with Citi and 8 Citi 435.02 3 and 70.8 million secondary units to Credit Suisse on the international 9 Morgan Stanley 380.70 2 be o ered by government-controlled side. 10 Celﬁn Capital 374.61 1 BNDESPar units of state-controlled A week later, brokerage Actinver Subtotal 10,361.11 19 Caixa bank. The bank plans to use raised 841 million pesos from pricing Total 12,220.99 23 85% of proceeds to increase lending a 15% stake at 10.75 pesos per share, capital and 15% for growth by Source: Dealogic towards the high end of a 9.50-11.50 acquisition. BdB and Bank of America peso target. Actinver’s own brokerage Merrill Lynch (BAML) are global managed the transaction, with BBVA ECM Rank by Fees, Year to June 11 coordinators, with BTG Pactual, Citi Bancomer, HSBC, Inbursa, Invex, Ixe Itaú rakes in equity fees and JPMorgan as coordinators. and UBS enlisted as co-managers. Petrobras had not set a timetable Rank Bookrunner Revenue $m % Share Developer Tres Marías and grower for its jumbo as of mid-June, but Proteak, raising up to 1.0 billion pesos 1 Banco Itaú 42.80 19.78 deal watchers were encouraged each, were awaiting better conditions 2 Credit Suisse 36.97 17.09 by the Brazilian senate’s approval as of mid-June. 3 BTG Pactual 34.22 15.82 of a bill allowing the government It is hoped new issuance beyond 4 Bradesco 19.30 8.92 exchange up to ﬁve billion barrels of the Bovespa will revive when markets 5 JPMorgan 13.68 6.32 oil rights for shares. This will happen return. “We would deﬁnitely welcome Subtotal 146.96 67.93 concurrently with an o er to minority more issuance outside Brazil,” says Total 216.34 100.00 shareholders. The value of the deal, Jose Costa Buck, portfolio manager at Source: Dealogic which had been estimated at $25 T. Rowe Price, which manages about billion equivalent, will depend on the $3 billion in LatAm equity for its per-barrel price level established, with analysts expecting $5-$7. dedicated fund. The sale will help the state-controlled oil producer fund Costa Buck says the main challenge is that major markets what will be as much as $220 billion in spending through 2014 like Mexico, Chile and Colombia only have a small number to develop its pre-salt discoveries. BAML, Bradesco, Citi, Itaú, of viable issuers. He adds that issuance from the ﬁnancial Morgan Stanley and Santander are global coordinators, with and retail sectors is most likely. Among larger hopefuls are BdB hired for the domestic portion. Colombian ﬁnancial holding company Grupo Aval, which is Expectations of Petrobras and BdB have created a bit of heard preparing an NYSE o er that could raise as much as $1.5 overhang, with investors hesitating to play in smaller deals. The billion. LF upside is that it could pave the way for more o erings later in UPDATE > the year. “There’s so much uncertainty about the size, and so much For daily ECM news, see www.latinﬁnance.com politics involved, that its di cult to get that much performance

Mexicans Break IPO Ice

July/August 2010

LATINFINANCE 7

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Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010