Latin Finance - March/April 2011 - 10

Equity

Oops, They Did it Again

Arezzo pricing a 565.8 million reais deal at the top of its price range, proving to bankers that a smaller deal could get done A hearty new equity issuance pipeline is building in LatAm, if properly marketed. It sold 29.7 million shares at 19.00 reais though, as at the beginning of 2010, friction between buyers each, hitting the top of a 15.00-19.00 reais band. BAML, Credit and sellers threatened to poison the punch. Last year’s ﬂow was Suisse and Itaú managed the sale, which was up at 21.03 reais disrupted by disagreement over price. This year, international mid-February. investors are spooked by inﬂation and Middle East volatility that The mid-sized IPOs that followed had varied luck, with fueled EM outﬂows and rotation back into the US. Portuguese mall operator Sonae Sierra and Autometal, a unit “We’ve been seeing signiﬁcant fund outﬂow from EM,” says of Spain’s CIE, both having to discount IPOs from initial ranges. a New York-based ECM banker on several of the recent deals. He Sonae raised 478.26 million reais, eventually selling at 20.00 attributes this to inﬂation worries, and the desire to put more reais versus a 21.50-26.50 reais range. Credit Suisse, Itaú and cash to work in developed markets as JPMorgan ran the deal. It traded at more people take a positive view on 20.60 reais February 16. ECM Rank by Volume, Year to February 23 economic recovery. Autometal raised 484.8 million JPMorgan takes top spot Nonetheless, investors are positive. reais at 14.00 reais versus a 17.00Rank Bookrunner Value $m # Deals “Emerging markets are still one of the 21.00 reais range. The deal was run 1 JPMorgan 807 4 best stories globally, you just need to by Credit Suisse, JPMorgan and 2 Banco Itaú 780 8 be conscious of what you’re paying for Itaú and Santander, and traded at those stories,” says Matt Hochstetler, 14.00 reais mid-February. Bankers 3 Credit Suisse 725 8 EM portfolio manager at Janus, which managing these deals say investors 4 BofA Merrill 543 4 has $1 billion in LatAm equity. are being very selective, but are 5 LarrainVial 519 1 A lot of new supply is scheduled, still showing appetite for issuers 6 Morgan Stanley 504 4 particularly deals linked to Brazilian with good stories that connect 7 BTG Pactual 497 4 consumer growth, on which investors with the growing power of Brazil’s 8 UBS 338 1 remain bullish. Restaurant operator consumers. 9 Santander 166 3 International Meal Company was set On the larger size end of the 10 Citi 135 1 to test waters in early March through scale, Queiroz Galvão also had to Subtotal 5,015 13 BTG Pactual, Credit Suisse and chop the price, to 19 reais versus Total 5,327 13 Santander, in a deal seen raising about 23-29 reais hopes. The IPO, put o 500 million reais. since last year, raised 1.52 billion Source: Dealogic Water utility CAB Ambiental was reais, and was managed by BAML, set to be the second issuer to use the BTG and Itaú. The E&P operation is ECM Rank by Fees, Year to February 23 Bovespa Mais program for small cap raising funds to acquire new blocks Itaú edges out competition listings, with a 100 million real o er and develop existing ones, and Rank Bookrunner Revenue $m % Share via Safra and Banco do Brasil. traded at 19.30 reais February 16. 1 Banco Itaú 22 18.00 Further out, the pipeline included Adecoagro, the Luxemburg-listed 2 JPMorgan 20 16.10 a follow-on from developer BrasilAgro, agricultural player backed by George 3 Credit Suisse 16 13.30 with Bank of America Merrill Lynch Soros and the Qatar government 4 BofA Merrill 14 11.30 (BAML), BTG and JPMorgan. Event that operates in Brazil, Argentina promoter T4F planned to IPO, through and Uruguay, also fell short. The 5 Morgan Stanley 12 9.60 BTG, Bradesco and Credit Suisse. New York deal raised $314 million, Subtotal 84 68.30 Food products company Camil hitting the bottom of a $11-$12 price Total 122 100.00 Alimentos meanwhile tapped range which had been revised from Source: Dealogic Bradesco, Credit Suisse and Santander $13-$15. Shares were at $12.50 for an IPO, while cement maker Cementos Liz was aiming to ﬂoat February 16. through Itaú and JPMorgan. A follow-on from homebuilder Direcional Engenharia The rest of the year could include deals from restaurant landed at a 14.7% discount to its prior close, a bigger markdown operator Arcos Dorados, airlines Webjet and Azul, tourism than others this year, owed to poor market conditions at the operator CVC, Petrobras contractor Enesa, commodities players time of pricing. Follow-ons of 414 million reais in stock from ETH Bioenergia and Louis Dreyfus Brasil, as well as drugstores homebuilder Tecnisa and 199 million reais from Brasil Brokers BR Pharma and Drogaria São Paulo, according to bankers and fared better. LF investors.

Mixed Mid-Cap Fortunes
10 LATINFINANCE

UPDATE

The year got o to a positive start, with shoe manufacturer

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March/April 2011

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Latin Finance - March/April 2011

Table of Contents for the Digital Edition of Latin Finance - March/April 2011