Latin Finance - May/June 2009 - 10

M&A Esteves Claws Back Pactual Starring Ecopetrol, Vale The energy and mining sectors continue to see the most M&A action in LatAm, with Ecopetrol having made more than $1 Cash-strapped UBS has sold its Brazil operations to BTG, a billion in acquisitions so far this year and Vale divesting to boutique run by André Esteves, who sold the same unit to the support project development. Swiss bank in 2006. The $2.475 billion purchase of UBS Banco Bidders are already eyeing Brazil miner MMX and the Pactual will be paid for in cash and the assumption of liabilities, Colombian government is seeking to sell its 57% stake in including a deferred compensation package. In 2006, former electricity generator Isagen. The stake is valued at 3 trillion Pactual managing partner Esteves sold his shop to UBS for $1.0 billion cash and up to $1.6 billion in compensation deferred to pesos, according to Colombian finance minister Oscar Zuluaga. 2011 – subject to performance conditions which were met – and Healthcare, telecom and retail are also seeing some flow, rose to become the Swiss bank’s global head of fixed income. although not enough to rival energy and mining. UBS also retained $500 million in shares for Pactual and UBS Ecopetrol has continued its shopping spree with the employees, payable beginning on the fifth anniversary of closing. acquisition of Enbridge’s 24.7% stake in the Ocensa oil pipeline It estimated the present value of the for $417.8 million in cash. The deal deal at $2.5 billion at the time, and increases Ecopetrol’s stake in Ocensa M&A Rank by Volume, Year to April 20 UBS expects the sale to result in a to 60.0% from 35.3% and is seen as JPMorgan on a roll small loss. BTG will apparently vital to the growth strategy of the Rank Advisor Value $m # deals assume the compensation liabilities company, which aims to increase oil 1 JPMorgan 6,702.23 10 as part of the transaction, but it output. 2 Morgan Stanley 6,400.15 6 declines to comment on the specifics Ecopetrol has also purchased 3 UBS 4,783.83 4 of the financing. assets of Maurel & Prom’s Hocol 4 Credit Suisse 3,568.70 5 The deal was negotiated privately, Petroleum unit in Colombia for $748 5 Nomura 3,498.00 3 with no external advisors. Neither side million in cash. Previously it had 6 China International Capital 3,438.00 2 would comment on how long they had acquired Glencore’s 51% stake in the 6 Blackstone 3,438.00 2 been discussing a deal, but rumors Cartagena refinery for $549 million 8 Rothschild 2,245.27 2 have been circulating for months and Offshore International Group, 9 Deutsche Bank 2,000.00 1 about former Pactual partners looking whose main asset is Petro-Tech 10 Banco Fator 1,851.40 1 to separate from UBS. Peruana for $900 million. Scotia Subtotal 12,465.15 21 The new entity, BTG Pactual, will Waterous advised on the deal, which Total 22,224.95 234 consist of an investment bank in was done in conjunction with Korea Brazil and asset managers in London National Oil. Source: Dealogic and New York. UBS has a stake in Meanwhile, Vale has been selling BTG, which it will apparently retain, stakes it owns in other miners. It has along with distribution and prime brokerage agreements. At the sold almost 15 million shares in Usiminas for 40.00 reais per end of March, UBS Pactual had assets of approximately 14 billion share, or a total of 594.7 million reais, to a group of Usiminas shareholders. The buyers include Camargo Correa, Mitsubishi, reais, net equity of around 4 billion reais, and approximately 57 Nippon Steel and Votorantim. The stake is equal to 2.93% of billion reais in assets under management, according to BTG. Usiminas’ total capital, Vale says. After this sale, Vale will no longer have a participation in Usiminas. And the sale of MMX, the Brazilian iron ore project The sale by UBS of Pactual mid-April raises doubts about the Swiss bank’s long term commitment to it LatAm business, which controlled by Eike Batista, is gaining momentum, say people was underpinned by Brazil. UBS says the deal is consistent with a familiar with the process. Foreign strategic bidders are circling the asset, worth up to $1.4 billion. Among Chinese bidders, policy to continue to reduce its risk profile, strengthen the Wuhan Iron and Steel Group and Baosteel are heard pursuing balance sheet and sharpen its business focus, but it is the asset. withdrawing from a market that most of the competition MMX’s prime asset, an iron ore mine called MMX Sudeste, as considers core to any regional investment banking platform. “We will continue to have a sizeable presence in Mexico and well as rights to exploit it, are up for sale, alongside MMX representative offices in other Latin American countries,” says a Corumbá, and sister logistics company LLX’s Porto Sudeste. MMX Sudeste produces around 8.6 million tons of iron ore, and UBS spokesman. “We have no intention to exit any other EM could be worth north of $900 million, according to the region,” he adds. UBS has rep offices in Argentina, Chile, estimates of a Brazil-based mining analyst. Credit Suisse was Panama, Uruguay, Cayman Islands and Bahamas. hired to advise MMX on a sale. LF When it bought Pactual in 2006, then-CEO Peter Wuffli hailed Brazil as one of the world’s fastest growing financial markets and a key focus for UBS. The bank was a leader in the UPDATE > Brazil equity boom of 2007 and finished second last year in the For daily M&A news see www.latinfinance.com LatAm core investment bank fees league table. UBS Exits Brazil 10 LATINFINANCE May/June 2009

http://www.latinfinance.com

Latin Finance - May/June 2009

Table of Contents for the Digital Edition of Latin Finance - May/June 2009