The threat of a hike in US interest rates and subsequent EM
selloff has meant a rest for LatAm’s busy debt capital markets. A heavy equity
pipeline has filled up for the June-July window, with issuers eager to get out
while they can. It is now clear not all will make it.
The poor market conditions, along with an aggressive valuation
and poor news coming out of Brazil, have derailed the ambitions of Votorantim
Cimentos. The unit of the Votorantim conglomerate had been targeting 8 billion reais ($3.7 billion) in what might have
been the biggest IPO of the year
in the region. The issuer still may try again later in the year.
Other Brazilians remain in the pipeline, but have yet to
launch. CPFL Energia, which
pulled an IPO attempt last year, is the largest, and is joined by airline Azul. Follow-ons
from Brazil or anywhere else in the region still stand a reasonable chance of
getting done, bankers say, especially if issuers are flexible on the pricing. Via Varejo, MPX and Klabin are targeting
In Mexico, a follow-on from OHL Mexico will
give the market its first idea of the viability of follow-ons from large
well-established names. The road operator is targeting 8 billion pesos ($621
million). A $3 billion deal from Banorte awaits in
July, and developer Vesta is also
planning on raising additional funds. Next week, Inbursa and airport operator OMA are scheduled
to have all-secondary share deals representing selldowns of CaixaBank and ICA,
The $230 million IPO of Hoteles City
squeaked by last week, but airline Volaris could face
a tougher battle if poor market conditions persist.
Peru’s Grana y Montero was
still heard planning to launch a follow-on that would represent the debut of
its US ADS.
Investors note much hinged on the news from Wednesday’s US
federal reserve meeting. A positive tone could help both debt and equity
issuers. ECM has been looking at a potential record year. LatAm equity issuers
raised $19.80 billion from 41 transactions in 2013 through June 14, compared to
$8.52 billion from 35 during the corresponding period in 2012. LF
Market Troubles Claim ECM