Latin Finance - July/August 2012 - 34

Corporate Performance Ranking

Top of the crop
By Ben Miller s of late June, Itaú, one of Brazil’s largest banks, was getting ready to bring payment processor Redecard back in-house. To get the 50% it doesn’t already own, Itaú was prepared to pay 11.8 billion reais ($5.67 billion). Minority investors including Lazard Asset Management were pressing for a higher valuation, and the matter is yet to be resolved. Itaú and its competitors have grown substantially in recent years providing credit and services to an expanding middle class whose purchasing power has increased steadily. As spending has risen, the value of Redecard – which with its competitor Cielo captures nearly all the credit card transactions in Brazil – has become self-evident to Itaú and to investors. This is reflected in the first-ever LatinFinance Corporate Performance Ranking. Redecard comes in at the top of this

LatinFinance’s first Corporate Performance Ranking highlights the diversity and strength of some of the best companies in the region on equity-based performance
year’s list, with indicators led by a return of 32.53% in 2011. Cielo finished at number three. Both have shown strong growth since their respective IPOs in 2007 and 2009. Generating strong cashflows, the pair has not been the most active capital markets users since their Bovespa debuts, though Redecard raised 1.5 billion reais in Brazil’s domestic bond market in April. A successful acquisition of the remainder by Itaú would involve the delisting of Redecard. The deal offers some promising prospects for Itaú in terms of additional businesses that the bank could generate through the Redecard network, according to Barclays. It is also part of Itaú’s strategy to compete with its peers for business in the small and medium-sized enterprises category. As Brazil accounts for the vast majority of Latin America’s equity markets, it is no surprise that Brazilian entities dominate the top of the list, with nine of the top 10 and 17 of the top 20. Mexican names account for the rest. Other support services stocks, namely payment processor Valid, frequent flyer program Multiplus and financial clearing house Cetip, also figure into the top 20, and look set to capture the consumer growth wave.

Investment Grade Top 10
Chileans join Brazil and Mexico Rank 1 2 3 4 5 6 7 8 9 10 Name Redecard Penoles Industrias Entel Ambev Localiza Sqm Volcan Tractebel Ultrapar Kimberly Clark Mex Country Brazil Mexico Chile Brazil Brazil Chile Peru Brazil Brazil Mexico Sector Support Services Mining Telecommunications Beverage Auto Rental Mining Mining Electric Power Chemical Paper Manufacturing Return in 2011 % in US Dollars 32.53 22.69 13.21 22.72 -14.18 -3.52 0.78 3.23 12.08 -7.79 ROE (avg) in 2011 % 88.94 36.45 22.94 32.58 27.35 31.77 30.74 25.95 14.95 43.13 Volume vs Market Cap % 85.28 15.14 36.33 11.55 127.60 28.32 21.09 20.57 39.99 19.59 Rank of Return 30 48 75 47 283 181 146 127 76 213

Source: LatinFinance and Economatica

34 LatinFinance

July/August 2012

Latin Finance - July/August 2012

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