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Initial Pampa Offering? El Tejar Weighs Options

On March 11, 2010, In energy & agriculture, foreign investment, by InvestBA
Buenos Aires grain & meat giant El Tejar is backed by Capital Group Companies & Altima Partners

Buenos Aires grain & meat giant El Tejar is backed by Capital Group Companies & Altima Partners

More Buenos Aires IPO news this week on the heels of yesterday’s post regarding TGLT’s public offering ambitions. Bloomberg BusinessWeek is reporting that BA-based El Tejar is weighing an IPO in New York and taking the necessary steps to be in compliance whenever the mood strikes over the next three years. El Tejar CEO Oscar Alvarado told BBW, “We are preparing ourselves so that Brazil is not our only option, and the option exists of doing it in New York. We are preparing the company so as to be able to make the decision to go public whenever we decide.” With operations in Argentina, Bolivia, Brazil, Paraguay and Uruguay, El Tejar designs and manages grain and meat production systems with an emphasis on risk management and environmental sustainability. (Org Chart) El Tejar’s annual production of grains and oilseeds  is roughly 3 million tons according to Bloomberg, and the company should benefit from record corn and soybean crops this year in both Argentina and Brazil.  While the company describes its focus and community involvement activities as “multilocal,” the company’s appeal to investors is definitely multinational. The two investment funds with the largest stakes in El Tejar are The Capital Group Companies and London-based Altima Partners LLP. (Bloomberg BusinessWeek article)

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Housing IPO Highlights Massive, Pent-up Demand

On March 10, 2010, In foreign investment, real estate, by InvestBA
Wealthy Argentines prefer cash when buying high-end properties like TGLT's Forum Puerto Madero.

Wealthy Argentines prefer cash when buying high-end properties like TGLT's Forum Puerto Madero.

It’s been almost two years since the Argentina stock exchange celebrated an IPO, but local homebuilder TGLT is ready to end the BA Bolsa’s offering drought. The Wall Street Journal’s Matthew Cowley reports, “TGLT plans to raise between $50 million and $70 million from an initial public offering of shares, equivalent to about 30% of the company’s total capital. About half of the shares are expected to be sold in Argentina and the rest to foreign investors.” TGLT and other Argentine real estate companies have waited patiently on the sidelines while private developers in Brazil, Chile and Mexico have raised close to $3 billion in equity capital since 2003. Cowley says TGLT “seeks to emulate the considerable success that home builders have had in (these) Latin American countries…meeting the massive pent-up demand for housing.”  Brazilian firm PDG Realty referenced this “pent-up demand” in a PowerPoint presentation back in 2007 when they purchased a stake in TGLT. Explaining the high-end preferences of the BA market, Jose Rozados of real estate journal Reporte Inmobiliario says, “Wealthy Argentines often eschew the banking system and financial investments, and instead buy property. They aren’t highly speculative investors nor are they looking for quick returns. That makes them fairly solid.” Another bullet point worth considering for foreign companies contemplating joint ventures with Argentine homebuilders: 90% of high-end homes bought in Buenos Aires are cash transactions. A nice change of pace from the mortgage meltdown landscape abroad.

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Grapes of Wrath: Napa’s Loss, Argentina’s Gain

On March 9, 2010, In foreign investment, real estate, by InvestBA
Napa vineyards like this one have struggled while Argentina growers gain market share.

Napa vineyards like this one have struggled while Argentina growers gain market share.

There’s nothing like a recession to test the limits of discretionary spending and consumer willingness to downshift to more affordable products and services. This has been especially true for U.S. wine lovers who, according to Bloomberg’s Dan Levy, are often passing up Super Premium and Ultra Premium wines in favor of “cheaper imports from countries such as Chile, Argentina and Australia.” In light of shifting preferences, the Wall Street Journal recently featured a video taste test of several “good $10 bottles of wine”…many of them malbecs from Argentina. To be sure, 2009 was a banner year for the Argentine wine industry where—despite the recession—global exports actually increased 10% to $585 million while U.S. sales jumped 20%.  Sales of bargain wine imports have had an impact on Napa Valley where Bloomberg says land values have fallen 15% since 2007 and no fewer than 10 wineries will change hands this year in distressed sales. Still, don’t expect the recent drop in Napa’s property values—average price of $150,000 per acre planted with red varietals—to erode Argentina’s attraction for foreign investors and wine enthusiasts. For the same $150,000,  you could buy a 7-acre vineyard in Mendoza complete with five-year old malbec grapes, Internet access and homesite with underground utilities for your private villa.

For more information about investment opportunities in Argentina wine country, send your inquiry to in@investba.com.

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Uruguay: “A Good Place to Visit Your Money”

On March 8, 2010, In entrepreneurs, foreign investment, by InvestBA
Foreign investment in Uruguay rose over 400% from 2004 to 2008. Much of it came from the U.S.

Foreign investment in Uruguay rose over 400% from 2004 to 2008. Much of it came from the U.S.

That’s how Josh Spero describes Uruguay for readers of Spear’s Wealth Management Survey. In the current Tax & Trust section, Spero offers one of the most sophisticated and accurate depictions of  the “Switzerland of South America” and “Argentina’s kid brother.” The narrative begins with a description of Uruguay and Switzerland’s shared advantages for foreign investors: Banking secrecy laws? Check. Favorable tax regime? Check. But the present-day similarities end there considering that Switzerland is knee-deep in recession while Uruguay emerged relatively unscathed having already beefed up its banking system and capital ratios almost a decade ago. Proof of confidence is evident in the country’s direct foreign investment numbers: From $397 million in 2004 to $2.2 billion in 2008 with Spain, Argentina and the United States accounting for the bulk of the funds flowing in. “Part of what has been driving this foreign investment,” Spero says, “is Uruguay’s seductive taxation rules, both for individuals and corporations.” And after spending time in the capital city of Montevideo, the financial reporter is left with one undeniable takeaway: “There are opportunities for entrepreneurs everywhere you turn in Uruguay.” Spero lists commercial real estate development, telecoms and land for “property, pleasure and space” as three of the most attractive investment opportunities. For more information about Uruguay and investment opportunities along this portion of The Tango Coast, send your inquiry to in@investba.com.

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Argentina Auto Production Grows 170%

On March 5, 2010, In foreign investment, by InvestBA
Argentina auto production jumped 170% in February compared to the year prior. (Source: ADEFA)

Argentina auto production jumped 170% in February compared to Feb'09. (Source: ADEFA)

Another positive sign of economic recovery for both Argentina and several export destination countries based on data released yesterday by the Argentina Association of Auto Manufacturers (ADEFA). The Association is reporting a 170% increase in auto production for February 2010 compared to the previous year, or approximately 40,000 units compared to 14,900 units in February 2009. Last month’s robust auto production figures also represent a 27% increase over January 2010, according to Clarín. Argentina’s auto exports boasted similar triple-digit gains with a 171% increase in February 2010 vs. February 2009. February exports to Brazil—historically the largest importer of vehicles manufactured in Argentina (87% per ADEFA)—jumped 185% compared to last February. The top three countries or regions posting the largest year-over-year increases in autos imported from Argentina were Asia (473%), Europe (838%), and South Africa (which must currently be importing enough new cars to accommodate every player, journalist and foreign visitor for the upcoming World Cup…19,200%). While exports are obviously booming, domestic auto sales at Argentina dealerships this February grew a more moderate 49% compared to last February. In terms of total production, the Top 5 manufacturers are GM Argentina, Ford Argentina, Fiat Argentina, Peugeot-Citroen and Renault Argentina. (Production by Make Pie Chart).

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