First Chile IPO in Two Years Hinges on Reform Agenda, Sutil Saysby
Agroindustrial company may list 25-30% of shares in 2016
IPO would be first since March 2013 as economic growth slows
Empresas Sutil SA is taking its cue from President Michelle Bachelet as it mulls the nation’s first initial public offering in more than two years. It won’t act until she does.
Chile’s second-largest agricultural industrial company is ready to sell 25 percent to 30 percent of its shares -- but not until it gets some clarity on what will happen with a measure being considered in Congress to strengthen labor unions and a new round of changes to simplify tax laws, a follow-on to a bill that passed in 2014.
"There are clouds still on the horizon that have to clear up," Chairman Juan Sutil said in an interview at his Santiago office. "You can’t do an appropriate projection of your cash flows without clarity."
Sutil joins a chorus of investors and companies that have complained the Bachelet’s agenda, including changes to education, pension, health and labor laws, has stifled spending and the economy. While it’s true there hasn’t been a single IPO since builder Empresa Constructora Moller & Perez Cotapos SA sold shares in March 2013, Chile’s economic growth is forecast to improve this year, a rare bright spot in a region crippled by plunging commodities prices and overall anemic appetite for riskier assets.
Chilean gas distribution company Lipigas SA and health insurer Colmena Salud SA have also filed documents recently to sell shares, according to data on the regulator’s website.
Sutil declined to discuss how much the company aims to raise in the share sale, for which brokerage Larrain Vial SA is an adviser. He said he expects formal regulatory approval by December.
Empresas Sutil had sales of 197 billion pesos ($325 million) last year, 80 percent of which came from its agroindustrial unit Coagra. It also has interests in wine, soft commodities trading and a financial institution called Banagro that finances farmers.
Funds from the IPO will be used to inject capital into Banagro and fruit-export unit Fruticola Olmue. The company may also expand nut exports to Peru, Sutil said. He also said Coagra is working with a local brokerage unit of Banco de Chile to issue a securitized bond, the proceeds of which will be used to pay off its $24 million in local inflation-indexed debt due in March.