INVESTMENT ARM OF MINERVA, THE BRAZILIAN MEAT GIANT, IS GOING TO LAUNCH ON SANTIAGO STOCK EXCHANGE
Iain Anderson, the company's top executive, reveals company’s plans: to boost the distribution segment in the local market and to debark in Peru before year’s end.
“We will have the IPO finished Towards the end of May or beginning of June.” That is the deadline for Athena Foods to be listed on the Santiago Stock Exchange, according to its CEO, Iain Anderson. It is the first foreign firm and company in the meat sector that comes to seek capital with an opening on the local stock market.
The big question with regard to the market is why Chile. Anderson explains: “[Chile] is a great export destination for our meat and a very relevant market. We want to understand it better, get more involved and take advantage of the opportunities. Chile is the best country to make the IPO as the market is mature and growing". He recognizes that the decision was influenced by the fact that it is a country with economic stability and clear rules. Throughout this interview he repeats over and over again that the focus of the business here will be distribution.
The business of Minerva and Athena
Minerva Foods is one of the world leaders in beef shipments. It started in 1992 in Brazil and it has been present in Chile since 2016 through Minerva Chile. It does not have slaughtering operations here as it concentrates on distribution. Athena Foods was officially created in 2018, when Minerva decided to separate markets, leaving international operations in Argentina, Colombia, Paraguay and Uruguay in the hands of the new company controlled from Chile and with Anderson in the lead. In August of the same year, this investment arm of the Brazilian parent company announced that they would make an Initial Public Offering on the Santiago Stock Exchange.
The goal is to offer 40% of its assets - some 247 million shares - and raise US$ 400 million. At the beginning of April, the Financial Market Commission (CMF) gave its green light to the operation. Athena Foods represents 40% of the gross income of Minerva Foods. It has 14 slaughter and boning plants: five in Argentina, five in Paraguay, three in Uruguay and one in Colombia. In addition, it has five distribution centers: two in Chile - Concepción and Santiago - one in Argentina, one in Colombia and one in Paraguay; in addition, it owns two processing plants in Argentina.
US$ 75 million in Chile
The mission with which Anderson – a London School of Economics trained economist with an experience in the food industry spanning more than three decades - arrived in Chile is to successfully finish the IPO and expand the meat distribution business and, in the future, expand into food distribution, too. Of the US$ 400 million that they expect to raise with the opening, US$ 250 million will be used in the Minerva Foods deleveraging acceleration plan in Brazil, which was announced in September 2018. The other US$ 150 million will remain in Athena Foods for investments in the region.
“We will allocate 40% of the money in Chile; some US$ 70 million. The same amount for Argentina and the remaining 20% for Colombia", says Anderson. Regarding the possibility of growing through acquisitions or in partnership with a local actor, Anderson responds that they are open to various options and that they are evaluating the alternatives, but he stresses company’s focus on distribution. “We could grow on our own, but we will probably do it by buying an established business and incorporating in it our experience and knowledge”, he says. A sixth market into which the company wants to expand in Latin America is Peru. “We export meat to this market, which is growing, and we are analyzing it”, reveals the executive.
With respect to Argentina, in mid-2017 Minerva bought - for US$ 300 million - the assets of its Brazilian competitor JBS, one of the largest meat processors in the world, with operations in Argentina, Paraguay and Uruguay. The people holding a controlling stake of JBS, the Batista family, had been involved in corruption and bribes accusations that spilled even to former president of Brazil Michel Temer; a case known as the ‘Weak meat operation’. This resulted in JBS having to sell part of its facilities to its archrival. "When we bought the JBA assets, there were five plants, four of them were closed. Today some of them are operational and we want to reinstall them to their full capacity", he says. He also mentions their expansion plans in Colombia.
Lack of liquidity?
Several operations are expected to be carried out on the local stock exchange this year. Once the CMF approves its registration, Cencosud Shopping will debut followed by the announced capital increase of Enel Americas worth US$ 3.5 billion, which has already been reduced to US$ 3 billion. Consequently, there are analysts who question whether there will be enough liquidity to absorb the offerings of the following months, among them the opening of Athena Foods.
Anderson remains unmoved: “We have been analyzing the market. There are several companies and investors that are looking into investing in Athena. Especially considering the situation in the protein sector worldwide, with swine fever in China, it makes a lot of sense.” The formal investor road show process starts today, Monday, April 29, at 4:30 p.m. at the W Hotel in Santiago, and will go on for two weeks. After that, they will fix the price and proceed to the opening. In Chile they have already met with local investment funds and “with a pension fund (AFP)”.
Source: El Mercurio