Morgan Stanley, BofA, Itau Made the Most on Top-Paying LatAm IPO

(Bloomberg) -- To the underwriters go the spoils, and one Latin American company spoiled banks much more than others that went public last year.

Argentina’s largest cement producer, Loma Negra Cia Industrial Argentina SA, paid $71.3 million in underwriting fees to the banks responsible for its $1.1 billion initial public offering in October, according to regulatory filings. That was the biggest payout for an IPO in the region last year, even though the deal was dwarfed by larger ones like Petrobras’s fuel division, Carrefour’s Brazilian unit and airline Azul.

Morgan Stanley, Bank of America, and Itau BBA were the main underwriters for Loma Negra. Each was responsible for around 24 percent of the shares sold. Bradesco BBI, Citigroup and HSBC were also part of the sales team.

Loma Negra’s offering was the region’s fourth-largest last year, according to data compiled by Bloomberg. The biggest was Petrobras Distribuidora, which raised 5 billion reais and generated 101 million reais ($31.4 million) in fees for underwriters -- around 2 percent of the offering size. Loma Negra’s fees represented around 6.5 percent, also the biggest percentage in Latin America last year.

“The success of Loma Negra’s IPO helps explain its fee size," said Joelson Oliveira Sampaio, a finance professor at Fundacao Getulio Vargas, a top Brazilian business school. The company priced its American depositary shares at $19 each, at the high end of the marketed range. The offering turned out to be the largest IPO by an Argentine company since YPF SA raised $2.7 billion in 1993, according to data compiled by Bloomberg. The company’s shares are up more than 30 percent since the offering.

Loma Negra declined to comment on IPO fees.

Total fees for equity offerings in Latin America -- IPOs and secondary deals -- added up to $657 million, the highest in 10 years, according to Dealogic.

The size of Loma Negra’s commissions also has to do with listing on the New York Stock Exchange: Banks ask for higher fees for that bourse. Argentina’s Despegar.com, which also trades on the NYSE, paid 5.75 percent of the total offering in fees, while Brazil’s Nexa Resources SA, a unit of Votorantim, paid 5 percent.

"In local markets, banks usually get between 3 percent to 4 percent of the deal in underwriting fees and only when the market is hot," Sampaio said.

To contact the reporters on this story: Felipe Marques in Sao Paulo at fmarques10@bloomberg.net, Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net.

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Larry DiTore, Christiana Sciaudone

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