Top news
Edison cuts fire risk with
US$3.1bn dual-tranche financing
Equities/Bonds Proceeds cover US$2.4bn contribution to California’s wildfire fund
BY ANTHONY HUGHES
#ALIFORNIA
BASEDûPOWERûUTILITYû
EDISON INTERNATIONAL has raised
funds for its initial contribution
to the state’s newly legislated
53BNûWILDlREûINSURANCEû
fund.
Edison has raised at least
US$3.1bn in equity and debt, to
cover subsidiary SOUTHERN
CALIFORNIA EDISON’s US$2.4bn
CONTRIBUTIONûTOûTHEûWILDlREû
fund.
The fund aims to help the
state’s utilities, including the
BANKRUPTû0ACIlCû'ASûû%LECTRIC û
by capping the future damages
BILLûFROMûWILDlRESûTHATûMAYûHAVEû
been caused by their power
infrastructure.
/Nû4UESDAY û%DISONûHAULEDûINû
a better than expected US$1.9bn
from the stock sale, an amount
that could rise to US$2.2bn with
exercise of the greenshoe, with
US$1.2bn going into the fund.
/Nû4HURSDAY û3#% ûWHICHûHASû
15m power customers in the
state, followed up by raising
US$1.2bn from the two-part sale
of bonds, thereby securing the
other half of US$2.4bn total
amount needed.
The excess proceeds raised
from the stock sale will be used
to repay commercial paper and
for general corporate purposes,
and will also help bankroll the
utility’s broader US$15bn capital
investment plan through 2021.
%DISONûmAGGEDûITSûFUNDINGûplans on its July 25 earnings call,
JUSTûTWOûWEEKSûAFTERû#ALIFORNIAû
Governor Gavin Newsom signed
a bill to create the fund in order
TOûREIMBURSEûUTILITIESûFORûWILDlREû
damages claims that exceed the
greater of US$1bn or their own
insurance coverage.
#ALIFORNIASûLEGISLATUREûRUSHEDû
to approve the bill to meet a July
ûDEADLINEûDEMANDEDûBYû30 û
which had threatened to lower
RATINGSûONû3#%ûANDû3EMPRAû
%NERGYSû3ANû$IEGOûû%LECTRIC û
ANOTHERûOFûTHEûSTATESûMAJORû
utilities.
/Nû*ULYû û30ûREAFlRMEDûITSû
BBB issuer credit ratings on
%DISONûANDû3#%ûANDûREMOVEDû
them from creditwatch with
negative implications.However, it warned it could
still lower their ratings if the
fund is depleted.UPSIZE
Edison’s equity offering saw a
syndicate of banks led by JP
Morgan, Barclays, Morgan Stanley,
Citigroup and Wells Fargo take a day
of marketing before pricing the
upsized sale of 28m shares (up
from 25m at launch) at US$68.50,
AûûDISCOUNTûTOûPRE
lLEûLEVELS
)NVESTORSûWEREûREWARDEDûINû
Wednesday’s session when
Edison stock surged 6.1% to
US$74.54, an
uncharacteristically big move
for the utility sector.
h)NVESTORSûWEREûRELIEVEDûTHATû
Edison got the equity raiseBrazil’s Banco Inter takes
premium deposit from SoftBank
Equities Japanese investor scoops up bulk of publicly marketed stock sale
BY STEPHEN LACEY
BANCO INTERûSCOREDûAûMAJORû
endorsement from SOFTBANK
GROUP after the Japanese tech
investor stepped in to buy the
BULKûOFûAû2BNû53M û
follow-on offer by the digital-
only Brazilian bank.
/Nû-ONDAYûMORNING ûAHEADûOFû
pricing, SoftBank committed to
purchase 19m of the 26m units on
OFFERûATû2û%XISTINGûINVESTORSû
had already committed to
purchase 6m units as part of a pre-
emptive rights process, leaving
JUSTûMûUNITSûFORûNEWûINVESTORS
“This was an issuer directed
allocation,” one banker involved
SAIDûh;"ANCOû)NTER=ûMANAGEMENTû
DIRECTEDûUSûTOûlLLû;3OFT"ANK=ûONû
that allocation.
h9OUûADDûTHATûTOûAûBOOKûTHATû
was already multiple-times
oversubscribed and other
investors saw their orders scaled
back,” he said.
The underwriters did
exercise a 20% upsize option
for another 5.5m units to boost
the offering size to 31.5m
units, but many investors were
still not allocated any shares.
0RICINGûOFû2ûPERûUNIT ûAû
package of one ordinary and
two preference shares, was a
sub-1% discount to Monday’s
CLOSEû"ANCOû)NTERûSURGEDûTOû
2ûBYû4UESDAYSûCLOSEûONû
the Bovespa, up 18.5% from the
OFFERûPRICEû/Nû7EDNESDAYûITû
CLOSEDûATû2 ûWITHûTHEûRISEû
unrelenting on Thursday
LEADINGûTOûAûCLOSEûOFû2 ûUPû
37.5% from offer.
Banco Bradesco, Goldman Sachs,
BTG Pactual, JP Morgan, Banco
Santander and state-ownedCaixa Economica Federal were
JOINTûBOOKRUNNERSûONûTHEû
transaction.LOFTY MULTIPLES
,EADSûHADûMARKETEDûTHEûDEALûATû
nine-times book value with the
aftermarket elevating that to a
low-teens multiple. By way of
COMPARISON û&IRSTû2EPUBLICû"ANK û
THEûHIGH
GROWTHû#ALIFORNIANû
bank catering to the uber-
wealthy, trades at 1.9 times.
What made the SoftBank
investment all the more galling
for institutions is that it raised
the pricing on the deal from the
LIKELYûLEVELûOFû2 ûACCORDINGû
to the bankers.
“None of the investment banks
WEREûINVOLVEDûINû;THEû3OFT"ANK=û
negotiations,” said a second
banker. “We suspect it started
very late: Thursday or Friday.“They waited for the market
to determine pricing and then
chose to come on top of that,”
THEûSECONDûBANKERûADDEDûh)Tû
wasn’t like SoftBank did a
fundamental analysis and said
@WELLûINVESTûATû2 ûORû2v
Nubank, a similarly high-
growth, Brazilian digital-only
bank, had raised US$400m at a
US$10bn valuation only a week
earlier that SoftBank had missed
out on. That may have motivated
3OFT"ANKûTOûSTEPûINTOû)NTER û
suggested the sources.
“They have a lot of money to
put to work,” said one of the
bankers, noting SoftBank’s
53BNû,ATINû!MERICAûFUNDû
LAUNCHEDûINû-ARCHûh9OUûHAVEûTOû
appreciate that there are not as
many opportunities in Brazil to
INVESTûINûlNANCIALûSERVICESûASû
there are in Asia, or even the US.”