3 November, 2009
UPDATE 2-Brazil fund GP denies seeking to exit BRMalls
* GP has no immediate plans to sell BRMalls stake
* GP wants to exit controlling group of Hypermarcas
* Decision to sell may signal shares are fairly valued (Adds context, updates shares prices)
By Guillermo Parra-Bernal
SAO PAULO, Nov 3 (Reuters) - GP Investments (GPIV11.SA), the largest Latin American private equity firm, has no immediate plans to sell its stake in shopping mall operator BRMalls (BRML3.SA), a spokeswoman for GP said on Tuesday.
The Hamilton, Bermuda-based private equity company was reported by O Estado de S. Paulo newspaper to be seeking to exit its investments in BRMalls, the largest Brazilian shopping mall operator.
The newspaper cited people familiar with the deal and said that among those interested would be U.S. billionaire Sam Zell, another BRMalls shareholder.
"The information isn't true," the GP Investments spokeswoman said.
Firms such as GP Investments usually invest in privately held companies, list them in the equity markets and then exit them to cash in gains.
Any attempt to sell BRMalls shares might indicate the stock of the shopping mall giant is fairly valued following its 106 percent price gain this year, analysts said.
The shares of Rio de Janeiro-based BRMalls tumbled 3.5 percent on Tuesday to 18.81 reais, compared with a gain of 1.8 percent in the benchmark Bovespa index .BVSP. GP Investments' Brazilian depositary receipts slumped 2.2 percent to 8.80 reais, the lowest since Aug. 19.
The private equity firm led by Brazilian financiers Fersen Lambranho and Antonio Bonchristiano said in August it had completed two divestments in the third quarter adding about $177 million to its own coffers and some of its funds.
HYPERMARCAS
Estado also reported that GP is nearing a sale of its 7 percent stake in consumer goods maker Hypermarcas SA (HYPE3.SA) and use proceeds from the sale to replenish the capital base of units hard-hit by the global financial crisis.
The newspaper said the private equity firm needs cash for two companies it controls -- Magnesita, an industrial-minerals producer, and Santo Antonio International, a U.S.-based oil drilling company it bought early in 2007.
GP, which disclosed a plan on Monday to leave Hypermarcas' controlling shareholder group in a securities filing, has to offer the shares to partners in the control group for 15 days. GP could raise up to 500 million reais ($284 million) from the Hypermarcas sale, according to Estado.
But one source close to the negotiations said GP is simply seeking to end its link with the control group and might not need to sell the shares.
"Independently from the timing of the divestiture, it is important (for the firm) to have flexibility in order to make the best investment decisions for the partners and for the fund's members," said the source, who declined to be quoted because the transaction is in the works.
Hypermarcas tumbled as much as 6.2 percent earlier on Tuesday and closed down 4.5 percent at 34.45 reais.
Any divestiture "gives a strong indication that ... Hypermarcas shares are somewhat fairly valued, which added to a potentially very large share sale, ends up creating an important overhang which is likely to exert pressure on prices," noted Juliana Rozenbaum, an analyst with Itau Securities.
She said that would trigger an "attractive buying opportunity into Hypermarcas."
Hypermarcas declined to comment.
($1=1.746 reais) (Reporting by Guillermo Parra-Bernal; editing by Tim Dobbyn and Andre Grenon)
Source: http://www.reuters.com
UPDATE 2-Brazil fund GP denies seeking to exit BRMalls Added: (03.11.2009)
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