Canada’s Tuscany Seeks Colombia Listing to Tap Pension Funds
Tuscany International Drilling Inc. (TID), a Canadian oil and gas company, plans to list shares on Colombia’s stock exchange to tap demand from pension funds, Chief Financial Officer Matt Moorman said.
Tuscany, which has operations in Colombia and Ecuador, will file for a listing May 17 in Bogota and plans for shares to begin trading by the end of next month.
Colombian pension funds manage 97.9 trillion pesos ($54.4 billion) and can invest only a portion in non-Colombian equities. The limits have pushed up the value of Colombia’s stock exchange. It trades at 16 times estimated earnings, compared to Brazil’s Bovespa at 10.1 times and Mexico’s IPC index at 14.3 times. Chile’s IPSA index trades at 17.6 times.
“The driver will be the institutional investors,” Moorman said in a telephone interview from Calgary. “We’ll decide the size of the Colombia float after we do our marketing and get a sense of the interest.”
Tuscany rose 1.7 percent to C$1.23 on the Toronto Stock Exchange at 12:17 p.m. New York time after rising as much as 8.3 percent earlier. Tuscany plans to move shares worth about C$50 million ($51.4 million) to Colombia, leaving equity of about C$190 million in Canada, Moorman said.
Petrominerales Ltd. (PMG), an oil and gas exploration company that also trades on the Toronto exchange, expects to list shares in Colombia in as soon as one month, Tannya Morales, vice- president of finance for the company, said yesterday.
Tuscany and Petrominerales are among as many as 11 Canadian energy and precious metals companies that may seek to be listed on the Colombian exchange, said Andres Jimenez, head of international sales for brokerage Interbolsa SA.
These companies offer a less expensive means to invest in Colombia, an economy that may grow as much as 6 percent in 2011, said Brian Chase, head of Latin American equity research at JPMorgan Chase & Co. (JPM)
Chase cited the example of Ecopetrol SA (ECOPETL), Colombia’s state- run oil company, which accounts for 21 percent of the Bogota exchange’s IGBC index and trades at 14.2 times forward earnings compared to 10.4 times for Tuscany and 7.8 times for Petrominerales, according to Bloomberg data.
“Petrominerales is a company that is considerably cheaper than something like Ecopetrol,” Chase said in an interview from Santiago. “These off-index companies tend to be very under- owned by Latin American-dedicated investors, so the minute they move on index, it’s a big opportunity for investors.”
Tuscany shipped and installed 11 oil and gas exploration rigs to South America last year, increasing its total in the region to 17, Moorman said. At present, 12 rigs are operating in Colombia, Guyana, Ecuador and Brazil. Shipping costs were the main reason the company lost $19.7 million in 2010 on revenue of $19.4 million, he said.
Moorman said Tuscany will report positive earnings in the first quarter before interest, taxes, amortization and depreciation.
“It was a lost year from a financial perspective, but it was a crucial year as we established our business in South America,” he said. “The listing will help us build the company and get better known.”
Canadian energy companies that may list on the Colombia exchange this year include Gran Tierra Energy Inc. (GTE), Parex Resources Inc. (PXT) and C&C Energia Ltd. (CZE), Jimenez said. In an April 14 statement, Houston American Energy Corp. (HUSA) said it expects to be listed on the Colombian exchange in the fall.
Colombia’s central bank last month revised its 2011 economic growth forecast to 4 percent to 6 percent.
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