Hidrovias launched a bid of up to R$444 million; Sell ​​the motherland and tamasek

Hidrovias do Brasil will sell up to R$444 million of shares in a secondary offering that would give a partial exit to Pátria and Temasek, Singapore’s sovereign wealth fund.

They are the two largest investors in the waterways infrastructure and logistics company, and together own about 44% of the share capital.

The underlying offer will be R$342m (considering the closing price on Friday) and can be increased by another 30% if hot issue exercised, bringing the total to R$ 444 million.

Patria will sell part of justice which it has in Hidrovias through the Pátria Fund II, reducing the stake of this fund from 25.6% to 12.7% if it hot issue placed. The director also owns another 10.2% share capital through Pátria Fund IV.

Temasek — which is investing in the company through its Sommerville Investments fund — will reduce its stake from 8.35% to 4.15%, also factoring in the full offering.

The other major shareholder in Hidrovias is Tarpon, which owns 8.78% of the share capital and is not a seller of the offering.

Pátria is selling because the Fund II has already expired its divestment period. The manager had to get it waiver from clients to extend their exit from Hidrovias and from two other investments in the portfolio.

He created Pátria Hidrovias from scratch in 2010, with the acquisition of assets in the sector funded by the Second Capital Fund. The fourth fund entered Hidrovias after the IPO, buying when the stock was close to a little.

A director buys on paper notes that Patria’s departure should turn Hidrovias into a institution In fact, with new reference contributors who will need to strive for compatibility with administration about the future of the company.

Pátria and Temasek are taking advantage of the recent rally in stocks to cash out their investments.

The stock is up 57% since the start of the year, valuing the company at R$2.6 billion. At the IPO in 2020, the company was valued at over R$5 billion.

a pricing It is scheduled for Wednesday the 12th.

Sell ​​the shareholders they will have close 90 days, while the Pátria Fund IV (which does not sell) will have close 180 days.

The offering comes at a time when Hidrovias has shown operational improvements, with a strong first-quarter result driven by a good grain harvest that boosted haulage volumes.

However, Hydrovias continues to experience significant leverage, which is down quarter-over-quarter. In the first quarter, the net debt/EBITDA ratio closed at 4.6 times, compared to 4.9 times in the previous quarter, 5.3 times in the third quarter of last year and 6.5 times in the fourth quarter of 2021.

“The company has high debts, but it does not have a liquidity problem, because the debts are all long-term,” the manager said.

The high leverage is a legacy of the difficult years the company has faced recently, when its business was severely affected by climate issues.

Today, Hidrovias has two main businesses: the northern pass, which transports the grain crop from north of Mato Grosso; and the Southern Passage, which transports mainly iron ore through the waterway of the Paraná River. Shortly after the IPO, a severe drought affected navigation in the Southern Passage, paralyzing operations for several months. In the northern pass, the company suffered crop failure at Mato Grosso.

“The two major companies, which were seen as low-risk, suffered a lot in that period, which led to the collapse of the paper,” said this manager who held the paper. However, Hidrovias managed to continue making money. The deal proved itself at that point.”

Since the middle of last year, the weather problems have abated and the company’s results have been steadily improving.

The stock closed on Friday at R$3.42 and is trading at 9 times the estimated profit for this year.

The curators are Itaú BBA (leader), BTG Pactual, Santander and XP.

Peter Arbex