Latin Finance - October 2008 - 10

Equity VisaNet, San Antonio and El Tejar are hoping to bring Bovespa transactions in the fourth quarter. But bankers and investors say they would be surprised if more than one makes it out. As world markets implode, LatAm bolsas have seen a phenomenal “Unless there’s a desperate need for the funds I would wait until reversal of fortune, popping the bubble that inflated in the 2009,” adds Landers, referring in previous two years. In the year particular to VisaNet’s IPO. The credit through mid-September, Brazil’s Ibovespa was down 23%. In the ECM Rank by Volume, Year to September 15 card company filed for a deal in early Itaú firm at the top September which is expected to be the corresponding period of 2007 it had largest of the three offerings and the risen 20%. In short, the local equity Rank Bookrunner Value $m # deals one with most potential to succeed. market has given back nearly all its 1 Banco Itaú 4,532.96 6 VisaNet is joint-owned by Bradesco, gains since December 2006. 2 Credit Suisse 4,048.67 8 Equity strategists at shops Banco do Brasil and Banco Real, has 3 JPMorgan 3,773.40 7 including Citi and Morgan Stanley hired Bradesco’s BBI unit to lead the 4 Unibanco 1,847.40 2 local offering alongside BB have placed the country at the top of 5 Banco do Brasil 1,744.95 2 Investimentos, Santander, JPMorgan their performance list for the 6 UBS 1,711.92 4 and Goldman Sachs. In mid-September remainder of the year, citing excessive 7 Banco Bradesco 1,605.93 1 it had not updated its filing to provide overselling in both Brazil equities and 8 Citi 1,333.03 6 details on size and price. commodities. Citi sees the Bovespa 9 Banco Santander 1,207.96 4 VisaNet’s offer will be closely closing at 62,000 at year-end, a 10 HSBC 530.28 2 compared to Redecard, which did its downward revision from the 66,000 it Subtotal 22,336.50 21 IPO in 2007 and priced a follow-on in had predicted earlier. September 16 it Total 25,514.15 30 March. closed at 49,228. Source: Dealogic “Brazil is once again becoming one of the cheapest markets in EM,” says Will Landers, manager of BlackRock’s San Antonio Internacional, the GP LatAm funds, which total $8 billion. Investments-controlled oil and gas Core IB Rank by Fees, Year to September 15 “Brazil’s companies are now trading at servicing company is also on file with a CS leaps ahead Brazil depository receipt (BDR) IPO via a P/E ratio of eight times 2009 Rank Bookrunner Revenue $m % Share Credit Suisse, Itaú BBA, Credit Suisse earnings,” he adds. Landers says they 1 Credit Suisse 200.38 19.77 and Deutsche Bank. Bankers away from started the year at nine times and 2 Citi 107.88 10.64 the deal see it as an attractive company traded up to 12-13 times in May 3 UBS 102.05 10.07 with a good story and a strong sponsor following the country’s elevation to 4 Banco Itaú 100.29 9.90 backing it. But they add that may not be investment grade. 5 JPMorgan 74.32 7.33 enough to get a deal out. 6 Rothschild 41.03 4.05 San Antonio has assets in Argentina, 7 Merrill Lynch 33.42 3.30 Venezuela, and Bolivia, as well as Equity bankers in Brazil still see a huge 8 Banco Santander 30.69 3.03 Brazil, Mexico and Colombia. Investor disconnect between the secondary and 9 Goldman Sachs 29.58 2.92 aversion to risk, no matter who is new issue markets. “The [primary] 10 HSBC 27.28 2.69 backing it, is very high, say bankers. But market is shut right now and investors Subtotal 746.92 73.70 a banker on the transaction said in are taking a very short-term view on Total 1,013.48 100.00 their positions,” says the head of sales September it had not been pulled. San and trading at a Brazilian shop. “That’s Antonio has until late October before its Source: Dealogic latest numbers go stale. very bad for new issues,” he adds. The same may apply to El Tejar, the An aggressive pullout by global Argentine farm contractor with a large portion of its assets in investors from riskier asset classes including LatAm spells trouble Uruguay and southern Brazil. It is also seeking a BDR issue via for the region’s IPO hopefuls. Brazil equity funds have so far this year lost $173 million, just barely staying above water, according to Morgan Stanley and Itaú. While operating in what is likely Argentina’s most reliable and attractive sectors, the zip code risk EPFR Global. In the first two weeks of September, outflows totaled $190 million. LatAm equity has meanwhile seen redemptions worth makes it the least likely of the three hopefuls to make it out this some $2.79 billion in 2008 through mid-September, with $1.84 year, say bankers and investors. LF billion in the first two weeks of that month alone. “[The outflows] are definitely very worrisome for anyone UPDATE trying to bring an IPO right now,” says Evandro Pereira, head of For daily ECM news and an exclusive pipeline of deals see ECM at UBS Pactual, whose shop is not participating on any of the www.latinfinance.com filed deals. Brazil Bulls Rebuild Argentina Risk Flows Threaten IPOs 10 LATINFINANCE October 2008

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Latin Finance - October 2008

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