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)

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.

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.

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.

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).

A team of surgeons in Argentina where doctors are typically well-trained, confident & knowledgeable.

When most foreign journalists return home from a trip to Argentina, they often pen glowing reviews of their gastronomic conquests down south…Newsweek’s Howard Fineman is not one of those journalists. On a recent visit to see his daughter—who currently lives in Argentina—Fineman had a nasty bout with food poisoning. The illness and his subsequent 3-day stay in a private hospital in Bariloche opened Fineman’s eyes to the cost and quality of care advantages for expats and foreign visitors in Argentina. “My hospitalization included continuous intravenous fluids (to counter dehydration); IV antibiotics; an EKG, two blood tests and a chest X-ray; special meals; a private room; and even satellite-TV access to what seemed to be every obscure soccer match on the planet,” Fineman writes, “The doctors, nurses, aides, and others were all uniformly excellent. Total cost: about $1,500.” Considering that similar treatment in the U.S. would have cost roughly $12,000, the NBC political analyst was impressed by both the quality of care (”The doctors were clearly well trained and knowledgeable, and inspired confidence with their touch of Argentine cockiness.”) and the resourcefulness he witnessed first-hand. (”Perhaps they can’t always afford the latest in technology, but they strike me as doctors who don’t dwell on technology for its own sake.”) While most Argentine medical tourism coverage to date has focused exclusively on elective procedures in BA, InvestBA believes Fineman’s anecdote sheds important light on the non-elective, year-round quality care awaiting  expats, transplants and foreign travelers in Argentina. (Full article)

Models wear designs by Martin Churba during BA Fashion Week 2010. (AP/ Natacha Pisarenko)

Buenos Aires is the city where “shopping” is much more than an action verb for describing the favorite indoor activity of many females…“shopping” is a place. In fact, BA is home to some of the largest gallerias—or shoppings—in Latin America. BA shoppings like Alto Palermo, Paseo Alcorta, Patio Bullrich and the new DOT Baires mega-project all feature their share of international retail outlets, but those engaging in porteño retail therapy will also find a significant number of high-end stores and successful labels launched by Argentine designers. The highly anticipated BA Fashion Week, an annual showcase for Fall/Winter collections, is the launching pad for many of these aspiring designers. As always, this week’s event features dozens of designers showing a wide variety of unique garments and accessories like Cubreme’s coats, S-Mode’s swimsuits, Cosecha’s vintage clothing, Bienamada’s handbags and Ana Livni’s Uruguayan merino wool designs.  Not to be outdone on the global catwalk, the 2010 edition of BAFWeek is competing with Fashion Weeks in two other major fashion capitals, London & Milan. For foreign retail buyer inquiries regarding any of the collections featured in BAFWeek 2010, send a detailed e-mail to out@investba.com.

Former player & current coach Diego Maradona in a 1978 ad for long-time Argentina sponsor, Coca-Cola.

While some say beef is Argentina’s finest export, most European soccer club owners would politely disagree. The rosters of Europe’s legendary club teams are stacked with young players from Argentina like Lionel Messi, Sergio Agüero and Gonzalo Higuain. And while these talented twenty-somethings are gearing up for a match next week in Germany and this summer’s World Cup in South Africa, a recently announced agreement should raise the team’s profile and following in the United States. The Argentina Football Association (AFA) just inked a deal with a Chicago-based marketing group committing the National Team to four “friendly” matches in the U.S. between now and 2014.  AFA agent Guillermo Toffoni explained the branding significance of the deal to Reuters: “We want to open the market for the national team which is a very strong brand. It’s a brand that is as strong as or stronger than that of Real Madrid or Barcelona.” (Article) The global appeal of Argentina’s National Team is evident in the current roster of multinational Official Sponsors including Coca-Cola, VW, Adidas, Quilmes, YPF, Italcred, Standard Bank and Claro. While Brazil, Spain and England are more favored to win this year’s World Cup, odds are good the brand called Argentina will broaden it’s U.S. appeal beginning with the first friendly this September.

Wine critic Matt Kramer writes of the "wonderfulness" of Buenos Aires. (Pictured: Soberbia 22 in Palermo)

American wine critic and Wine Spectator contributing editor Matt Kramer arrives in Buenos Aires for a three-month stay and wastes little time getting to know the food & wine delights of his newly adopted barrio of Palermo Soho. Kramer authored several Making Sense of Wine books and coined a term “somewhereness” in describing a wine’s character.  Prior to his departure, Kramer—a seasoned globetrotter—says none of his friends or family members ever asked him,Why Argentina? “Apparently, the word is out on the wonderfulness of Argentina as a place and the Argentines as a people,” Kramer surmises, “And, let’s be honest, the word is also out about how wonderfully inexpensive Argentina is for those of us trading woebegone American bucks for even more economically bedraggled Argentine pesos.” In describing what makes BA unique, Kramer points to the “intactness” of the city and a true feeling of identity in the city’s many diverse neighborhoods. In his own neighborhood of Palermo Soho, Kramer praises the diversity of culinary offerings: “Around the corner from us is a Moroccan restaurant. Italian restaurants abound. And, surprisingly, there are a fair number of sushi places.” So for at least one veteran critic in Buenos Aires, it seems “somewhereness” has truly given way to “wonderfulness.” ¡Buen provecho! (Full Wine Spectator article)

Sebastian Piñera becomes Chile's next President in March. He is pro-business & foreign investment.

2011 will be a critical presidential election year in Argentina and aspiring candidates would do well to look at neighboring Chile and Uruguay for lessons in economic transformation. Both countries have elected presidents who ran on platforms prioritizing pro-business, foreign investment solutions over government programs and additional bureaucracy. Uruguay’s new president, Jose Mujica, takes office in March and “begins an international campaign for enticing investors to the country,” according to UPI. “Mujica said Uruguay needs more investment to create a greater number of better jobs and his government would ensure the right conditions are created for investors to be drawn to the Uruguayan economy. He realized the economy could not be improved only with legislation and that investors needed to have faith in Uruguay’s economic future.” And if Uruguay stands as the emerging model, Chile on the opposite border is the veteran shining star with a solid, twenty-year track record of attracting foreign investment across industries.  Building on that success, Investor’s Business Daily says the election of pro-free market Sebastian Piñera is a symbol “that an already prospering country (is) preparing to soar.” What has been Chile’s recipe for success? It’s really quite simple says IBD: “Instead of blaming the gringos and waging class warfare in Che Guevara T-shirts, they balanced their budget and respected private property. Instead of squandering a $19 billion state windfall from soaring copper prices, they managed it. They continued free-market privatization of pensions without reflexively opposing its origins, and signed free trade pacts with any nation that asked.” If it wants to remain relevant, much less competitive in the global economy, Argentina had better get its act together and do the same.  (Full IBD editorial)