Latin Finance - September/October 2010 - 8

Equity

Oil Blocks Pipeline

coordinators, with Barclays, BBVA and BTG Pactual as joint bookrunners. HRT Participações, a new entrant in the E&P space looking After challenging times earlier this year, Brazilian equity capital for funds to develop blocks in Brazil and Africa, is also planning markets are bursting with issuers ready to print. At the end of to IPO. There is no o cial size for the deal, to be led by August, however, the market awaited Petrobras. Credit Suisse as coordinator, with Citi and Goldman Sachs as With elections approaching in October and the government’s bookrunners. plan to complete a per-barrel price evaluation on oil reserves in Though the pipeline involves all sizes, bankers and investors August, rumors were ﬂying as to whether the planned follow-on expect the larger trades to dominate, at least initially. All would proceed in September, or be delayed. Bankers managing involved would be pleased if the likes of Petrobras and Repsol the trade insist it will hit schedule, helped establish pricing benchmarks though political factors are beyond such that the conﬂicts over valuations ECM Rank by Volume, Year to August 13 their control. – and the below range pricing and Itaú tops the charts The portion of the deal to hit the poor aftermarkets that came as a Rank Bookrunner Value $m # Deals public markets should be $20-$30 result – seen earlier this year would be 1 Banco Itaú 2,911 10 billion, with total size depending a thing of the past. 2 BofA Merrill 2,889 5 greatly on whether the new barrels price closer to $5 or $9. It should top 3 BTG Pactual 2,427 10 $60 billion after Brazilian government “We expect three to ﬁve deals per 4 JPMorgan 1,798 7 purchases. Such volume has investors month in Brazil through the year 5 Credit Suisse 1,701 11 hoarding cash and other issuers end,” says Gregg Nabhan, vice chair 6 Citi 1,523 4 carefully considering timing. of global ECM at BAML. He adds that 7 Banco do Brasil 1,339 3 The issuer wants to price sizes of these transactions are going to 8 Bradesco 888 7 September 30. Shorts put on ahead typically be bigger than the deals seen 9 Santander 589 6 of the deal – including liquidation earlier in the year, with a few topping 10 ABG Sundal Collier 550 1 by Soros Fund Management – have $1 billion equivalent. He says his shop Subtotal 16,615 23 dragged Petrobras preferred shares sees roughly $10 billion equivalent in Total 19,285 33 down 21.1% through mid-August. volume through the end of the year in Bankers close to the issue hope that Source: Dealogic Brazil, not including Petrobras. this ensures a pop when it launches. Beyond oil, some of Brazil’s larger Also factoring into the equation corporates have equity plans, though ECM Rank by Fees, Year to August 13 is how much of the o er goes to Brazilian banks tussle at top it is unclear which are marked for this sovereign wealth funds (SWFs). year. Vale is heard rounding up its Rank Bookrunner Revenue $m % Share “Having a strategic relationship relationship banks for an IPO spino of 1 Banco Itaú 46 18.70 with Brazil going forward will be its fertilizer assets into a new company 2 BTG Pactual 38 15.60 massively important to a number to be called Vale Fertilizantes. CSN still 3 Credit Suisse 38 15.30 of countries,” Chris Palmer, equity has an IPO for its Casa de Pedra iron 4 Bradesco 19 7.90 portfolio manager at Gartmore, with ore operation in consideration, which $2.5 billion under management in 5 JPMorgan 17 7.00 could be $3 billion. Latin equities, tells LatinFinance, Louis Dreyfus’ Brazilian sugar Subtotal 159 64.50 noting much that could be locked up and ethanol unit LDC Bioenergia was Total 246 100.00 by SWFs. heard planning to raise at least $1 Source: Dealogic This could ultimately have a billion in a share sale in Brazil. Tereos positive e ect, he explains, in that Internacional, which includes the these investors will demand transparency and assurance that assets of Brazil’s Açúcar Guarani, is expected to o er a follow on Petrobras will be run with shareholders’ best interests in mind. to raise the 590 million reais needed for a minimum ﬂoat. Bank of America Merrill Lynch (BAML), Bradesco, Citi, Itau, And university operator Estácio will sell secondary shares in a Morgan Stanley and Santander are global coordinators, with follow-on, through BTG and Credit Suisse. Also, issuers WTorre, Banco do Brasil (BdB) managing the domestic retail portion. GRV Solutions, Venti, Autometal, Norskan and Brazil Insurance Others, including BTG, Credit Suisse, Goldman and JPMorgan Participações e Administração will look to continue plans to were expected to be added to a bookrunner tear. issue earlier in the year that were put on hold. LF A delay in Petrobras could see others in the pipeline emerge, most notably a spino of Repsol’s Brazil assets, expected at $4 UPDATE > billion. O cials at the Spanish oil producer have said they intend to list by the end of the year, and would not necessarily wait for For daily ECM news, see www.latinﬁnance.com Petrobras. BAML, Credit Suisse, Itaú and Santander are global

Beyond the Black Stuff

8 LATINFINANCE

September/October 2010

http://www.latinfinance.com

Latin Finance - September/October 2010

Table of Contents for the Digital Edition of Latin Finance - September/October 2010