Votorantim could raise US$ 4 billion+ from cement IPO

30 May 2013

Votorantim has announced details of the Initial Public Offering (IPO) of shares in its cement business, Votorantim Cimentos. It plans to sell 400 million units at BRL 16.00 to BRL 19.00 (US$ 7.80 to US$ 9.26). Each unit comprises one common share and two preferred shares in the company. If it sells all this equity, plus an over-allotment allocation of an additional 60 million units, it could generate proceeds of BRL 8.74 billion (US$ 4.26 billion).

The 400 million common shares to be sold represent 7.3% of this class of Votorantim’s equity. If the over-allotment allocation is also taken, a total of 8.3% of the company’s common shares will have been floated. The preferred shares being sold are essentially a new class of equity for Votorantim. Both classes of shares will qualify for dividends, but only common shares carry full voting rights.

Votorantim Cimentos is seeking listings on both the Bolsa de Valores de São Paulo (BM&Fbovespa) in São Paulo, Brazil and the New York Stock Exchange (NYSE) in the US. Shares listed in New York will be in the form of American Depository Shares (ADS), with each ADS equivalent to two Brazilian units. This puts the price of each ADS at between US$ 15.59 and US$ 18.51.

Last year Votorantim Cimentos had revenues of BRL 9.48 billion (US$ 4.71 billion) and achieved net profits of BRL 1.64 billion (US$ 815 million). The company has a total of 33 cement plants worldwide, almost half of which are in its home market of Brazil, along with 23 grinding mills, 331 ready mixed concrete plants, 84 quarries, two clinker plants, two lime units and 13 mortar plants. Its total installed capacity is some 58 million tonnes of cement per year.

Votorantim is strongest in its home market, where it says its 30.1 million tonnes per year cement capacity is equivalent to a 36.7% market share. The company also has a significant presence in Argentina, where it claims a 22.8% market share with its 2.8 million tonnes per year capacity.

Its footprint elsewhere in Latin America includes Bolivia, Chile, Peru and Uruguay, and in the wider world it has facilities in the Canada, China, India, Morocco, Spain, Tunisia, Turkey and the US.

Votorantim says it will use the proceeds from the IPO to continue its strategy of organic expansion and diversification within Brazil, while outside its home market it will look for potential acquisitions in the heavy building materials sector, along with other strategic investments.

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