Latin Finance - January/February 2011 - 32

DEALS of the YEAR
2010

willing to go in at that price, leaving Deutsche as sole lead. The transaction is expected this year. Winning business without a regional lending business can be seen as a badge of honor. The other side of the coin is to risk losing a chance to get in on an expanding local markets business. In addition to adding hires to its corporate trading e ort in New York this year, Madan says Deutsche plans to open an o ce in Colombia. “We’ve had to pick our spots,” Ardura says, of the reigion’s local markets. “That’s largely a commercial bank territory,” which is by and large a proxy for the lending market. How much can be gained in 2011 by banks’ local presence remains to be determined, but in what looks to be a competitive year, shops will be taking any advantage to stay on top. Fortune will favor houses with growing coverage of the lower issuer tiers and ability to execute in several currencies. LF

Equity House
BTG Pactual

ate 2009 and 2010 will be remembered as a period when equity issuance returned to LatAm with mixed results. A few strong deals stand out, though the dominant theme was missed price targets and sloppy trading, as well as a weighty Petrobras transaction that the Brazilian government loved but investors considered unfavorable. Selecting a standout from the pool of recurring bookrunners is no easy task. None comes out completely clean, nor can any claim a lion’s share of the best trades in a year that may go down as a tale of two halves. “In the ﬁrst half of the year, we were still lacking fund ﬂows into Latin American and EM equity,” says Fabio Nazari, head of ECM at BTG Pactual. Investors were shy of allocating funds to small and mid-caps considering

Ups and Downs L

expected jumbos from Banco do Brasil and Petrobras in the pipe. Volatility from Europe did not help. From June, with a streak of equity inﬂows and better news from global markets, coupled with completion of Banco do Brasil’s follow-on and an Itaú block trade, investor conﬁdence ratcheted back up. This led to a busy post-Petrobras period, and has raised expectations for 2011. Nazari sees $25-$30 billion in transactions from Brazil this year, up from about $18 billion in 2010, and perhaps $5 billion in LatAm ex-Brazil. There will likely continue to be smaller transactions, of $250-$500 million in size, he says, and fewer jumbos than in 2010. In the second half of last year, many of the new o erings that had traded down earlier in the year began to perform. One such transaction was Multiplus, the miles program for TAM, priced in February well below the bottom of its range at 15.86 reais, but which had traded up steadily to 33.30 reais on November 15. BTG co-led the 629 million reais transaction with Credit Suisse. Brazil’s Mills Estruturas e Servicos de Engenharia in April di erentiated itself by actually hitting target with a 685.7 million real ﬂoat. The deal, through BTG, Itau, Goldman Sachs and UBS, was at 21.13 reais November 15, up from an 11.50 reais o ering price. BTG also landed roles on the four jumbo o erings in the period: Petrobras, Banco do Brasil’s $5.4 billion followon, JBS’ $910 million follow-on, and a poorly-performing $1.4 billion IPO from OSX. The last highlights the challenges of ﬂoating greenﬁeld risk. Karoon Gas and Queiroz Galvão are two in the oil sector who put o deals until this year amid rising November volatility. Oil and gas should still o er signiﬁcant deal ﬂow in 2011, says Enrique Corredor, BTG’s syndicate head. However, he notes that investors – both in Brazil and abroad – want to see more from the sectors linked to the emerging middle class: health care, retail and consumer goods. “People want to buy the Brazilian consumer,” Corredor says.

And after barely whetting appetites with Mills, infrastructure related issuers should begin to o er more possibilities as Brazil’s 2014 and 2016 sporting events get closer.

Lula’s happy: Petrobras unblocks pipe BTG booked $4.97 billion in apportioned volume through November 29 on 18 deals, according to Dealogic, good enough to lead the tables. In the corresponding period of 2009, it had $3.29 billion, putting it in third place. The bank earned $70 million in fees during the ﬁrst 11 months of 2010, the second highest total and representing a 12.9% market share. “It will continue to be very competitive [in 2011], and balance sheet can continue to play an important role, but being able to execute a good deal will be the key,” says Nazari, noting that in 2010 there was a lot of competition that may have undermined execution. Fees per transaction should be similar in 2011 from 2010, Nazari says, even if the total pool may be lower due to a greater proportion of follow-ons, which generally pay less, in 2011. Critics will suggest that BTG beneﬁtted from an awards period in which LatAm equity issuance was almost exclusively Brazil. With Mexico’s ﬁrst IPO in two years and deals from OHL Mexico, Andean ﬁsheries, and even an Argentine o ering, headlining the later part of 2010, all ECM shops will need to focus

32 LATINFINANCE

January/February 2011

Latin Finance - January/February 2011

Table of Contents for the Digital Edition of Latin Finance - January/February 2011