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McIPO: Arcos Dorados Investors Lovin It

On February 10, 2011, In foreign investment, franchises, us companies, by InvestBA

McDonald's in Buenos Aires

With over 1,800 outlets in 19 countries, Arcos Dorados' revenue topped US$3.8 billion in 2009.

Arcos Dorados, McDonald’s largest global franchisee is preparing for what will be one of Latin America’s biggest IPOs ever. BA-based Arcos, the group that owns the largest chain of restaurants in South America, will formally announce the IPO in the next week, and sources say shares could begin trading as early as April.

According to Cronista, Bank of America, JPMorgan and Morgan Stanley were chosen as lead underwriters for the deal which could top US$1 billion. It is still not clear how much of the company the group will sell or if they will seek additional funds. Some analysts are already looking at the IPO and investor response to it as a broader indicator of confidence in the region and the ability of a global brand like McDonald’s to capitalize on emerging markets and attractive demographics in South America.

The IPO announcement comes four years after McDonald’s was pressured to cut loose under-performing outlets in regions like South America. The company that emerged in 2007, Arcos Dorados, then went on a regional tear opening new restaurants throughout Latin America and growing market share with aggressive marketing and new store offerings like the popular McCafes. Arcos CEO Woods Staton, recently named LatinTrade’s CEO of the Year, oversaw revenue growth to US$3.6 billion in 2009 and expansion to 1,800 outlets in 19 countries. (Full Story in Spanish)

For more information about foreign investment opportunities in Buenos Aires and Argentina, visit our archives and download the new issue of InvestBA Privada.

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A New Day Dawning for Buenos Aires Private Equity

On May 5, 2010, In competitiveness, foreign investment, franchises, by InvestBA
Pegasus portfolio includes Freddo, Farmacity and Musimundo

Capital market development would benefit great Argentine brands like Freddo, Farmacity & Musimundo.

The Reuters Latin America Investment Summit takes place this week in Buenos Aires with fund managers and regional analysts dishing on sector opportunities, country risk and private equity. One of the largest players in BA private equity is Pegasus with a balanced portfolio of retail and real estate holdings.

After a turbulent decade, Pegasus President Mario Quintana feels like Argentina is turning an important corner for foreign investors seeking shorter-term exit strategies: “You could say that in the last 10 years we’ve gone through an unusually long cycle that’s not very favorable for exits. We are convinced that that is going to change a lot in the decade that’s starting now.”

With national elections looming in 2011, Quintana believes the next administration will be less interventionist and, in turn, capital markets will begin to mature to the level of regional rivals like Brazil and Mexico. Such a maturation would mean more local IPOs and broader sector representation on the Bolsa de Comercio de Buenos Aires where few retail and real estate companies are traded.

It’s a missed opportunity when you look at some of the fast-growing, strong brand franchises in the Pegasus portfolio like Farmacity, Musimundo and Freddo. Currently of the three, Quintana believes Farmacity could go public “not too far in the future.” The national pharmacy chain has over 100 outlets, 350 private label products and projected 2010 revenue of $500 million. More robust capital markets will be the perfect prescription for launching more Argentine IPOs and encouraging greater foreign investment in the coming decade.

For more information about private equity investment opportunities in Buenos Aires and Argentina, download EquityBA.

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Initial Pampa Offering? El Tejar Weighs Options

On March 11, 2010, In energy & agriculture, foreign investment, us companies, 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)

For more information about investment opportunities in Buenos Aires, download IncomeBA and the new issue of InvestBA Privada.

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Housing IPO Highlights Pent-up Demand

On March 10, 2010, In foreign investment, real estate, by InvestBA
TGLT Real Estate Buenos Aires Argentina markets 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.

For more information about Buenos Aires real estate opportunities, download IncomeBA and the new issue of InvestBA Privada.

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