Falabella last week from Ps4,300 to Ps5,000
but maintained an underperform rating on
the stock.
“We believe the main upside risk to our
target price [Ps5,000] is faster online
ADOPTIONûANDORûPROlTABILITYûOFûTHEûONLINEû
business,” the bank’s analysts wrote.
Falabella’s purchase of Linio for US$138m
is important to growing online sales. The
company also plans to spend US$350m on
e-commerce payment systems and logistics,
US$120m on data analytics, and US$150m
on a joint venture with Swiss retailer IKEA.
MEXICO
MIFEL ABANDONS IPO AMID INVESTOR
PUSHBACK
In another blow to the Mexican equity
markets, BANCA MIFEL was forced to shut
down its IPO on Wednesday amid an
increasingly tough market for issuers.
Mifel is the second Mexican IPO to stall in
a matter of weeks, crushing hopes that the
country might see more such deals this year.
Just this month, Mexican retailer GRUPO
COPPEL postponed an IPO raising more than
$1bn that would have been one of the
biggest out of Mexico in years.
2ECENTûVOLATILITYûHASûSHAKENûCONlDENCE û
but a small IPO such as that of Mifel, which
was largely secondary, was not the right
type of product for investors in current
market conditions.
“The market has been challenging in the
last few weeks, but I don’t think market
conditions were necessarily why this deal
failed,” said one banker away from the IPO.
“The structure of the deal was just not
well received. It has a very small market cap
and there was little primary component to
push it to grow.”
Just 30% of the offering was primary, with
the remaining shares being sold by private
EQUITYûlRMû!DVENTû)NTERNATIONALûANDûTHEû
IFC, the World Bank’s private sector arm.
More than valuations, the bank’s
comparatively limited growth potential put
off the buyside, said the banker.
While Mifel is a solid mid-size bank with
an impressive ROE last year of 18.1%, it did
not hold broad appeal.
“There are plenty of public banks in the
market and no one wants to own another
small bank name,” the banker said.
-IFELSûLOANûPORTFOLIOûANDûlNANCIALû
margins have grown at a compound annual
growth rate of around 34%, but that proved
INSUFlCIENTûTOûDRAWûAûCROWD
“That is not fast enough for a $700m
company,” said the banker. “[Argentina’s]
Supervielle was growing at 100% when it did
its IPO. That is what investors like to see
when you bring an IPO.”
The deal, which had been expected to
raise about $350m, included the base sale of
167m shares and was marketed through
leads JP Morgan, Bank of America Merrill
Lynch, BBVA Bancomer and Santander at a
price range of Ps35-40.
Risk-averse investors are seeking larger,
more liquid stocks, especially in a country
where the political landscape remains
uncertain as Mexico’s new populist
president prepares to take the reins of
power in December.
“Whenever you do a deal in Latin
America, especially when it is a smallcompany, you need all the stars to align and
this time they didn’t,” said a second banker.
“Small deals make investors nervous.
They prefer large, well-known stories.”STRUCTURED EQUITY
UNITED STATES
EVOLENT BUILDS FOR GROWTH WITH
US$150m CBEVOLENT HEALTH raised US$150m last week
from the sale of a seven-year convertible
bond to fund the acquisition of Medicare-
focused software provider New Century
Health.
The CB, marketed for one day, follows the
completion of the NCH purchase earlier this
month for US$197m, including US$120m of
cash and 3.1m EVH shares.
Goldman Sachs and JP Morgan generated
SUFlCIENTûDEMANDûTOûBUMPûSIZINGûTOû
US$150m, from US$125m at launch, with
pricing set at a 1.5% coupon and 32.5%
conversion premium, the midpoint of 1.25%-
1.75% and 30%-35% talk.
The security cannot be called for four
years and is provisionally callable thereafter
at a 130% to the base conversion price with
an investor make-whole, a standard
PROVISIONûTOûPROVIDEûTHEûISSUERûmEXIBILITYûTOû
manage stock dilution.
Evolent shares fell 3.7% during the
Wednesday marketing to US$25.23, putting
the conversion price at US$33.40 and
provisional call trigger at US$43.46. They
have more than doubled on continued
execution by the company and potential for
healthcare reform.
Evolent continues to make slow progress
in transitioning healthcare providers from
fee-for-service reimbursement models to
value-based care models.
In August, the company signed up two
new hospital systems, taking the number of
new hospitals enrolled to 11, already
topping the seven to nine it had hoped for
on entering the year.
4HOSEûWINSûAREûmOWINGûTOûTHEûBOTTOMûLINE û
as Evolent topped expectations in the
second quarter by reporting adjusted Ebitda
of US$4.9m on revenue of US$144.5m,
versus the US$4.1m and US$141.8m
expected.EQUITY-LINKED DEALS WEEK ENDING: 19/10/2018
Issuer Country Date Amount Greenshoe Tenor Coupon (%) Premium (%) Bookrunner(s)
Evolent Health US 17/10/2018 US$150.0m US$22.5m 7y 1.50 32.5 Goldman Sachs, JP Morgan
GLOBAL CONVERTIBLE OFFERINGS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Goldman Sachs 54 11,400.15 13.8
2 JP Morgan 55 8,144.51 9.9
3 Morgan Stanley 49 8,041.68 9.8
4 BAML 38 6,644.41 8.1
5 Citigroup 26 3,810.36 4.6
6 Deutsche Bank 20 3,221.77 3.9
7 UBS 9 2,508.98 3.0
8 Credit Suisse 21 2,508.80 3.0
9 Barclays 16 2,326.74 2.8
10 Wells Fargo 16 2,031.12 2.5
Total 296 82,430.54
Including exchangeables and domestic offerings.
Source: Refinitiv SDC code: C9
GLOBAL CONVERTIBLE OFFERINGS – US
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Morgan Stanley 38 6,655.62 17.2
2 BAML 33 6,074.11 15.7
3 Goldman Sachs 38 5,960.23 15.4
4 JP Morgan 39 4,827.78 12.5
5 Citigroup 17 2,518.10 6.5
6 Wells Fargo 16 2,031.12 5.2
7 Barclays 13 2,023.49 5.2
8 Deutsche Bank 10 1,250.83 3.2
9 Jefferies 10 1,036.37 2.7
10 Credit Suisse 11 982.33 2.5
Total 102 38,769.96Source: Refinitiv SDC code: C9a