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Last updated: April 14, 2011 2:49 pm
Arcos Dorados, the world’s largest McDonald’s franchisee, sold $1.25bn worth of shares in a US initial public offering and the most successful Latin American flotation since the financial crisis.
Arcos Dorados – or “Golden Arches” – generates 5.1 per cent of McDonald’s sales worldwide. It operates primarily in Brazil and Argentina, and is the largest of any Latin American fast-food chain.
In its offering, it sold more shares than expected, 73.5m, at $17 a share, above its projected range of $13 to $15. It was the first Latin America-based group to sell shares above its range since mid-2007. Investors, primarily US hedge funds, flocked to the company as an entry point for the emerging consumer class in Brazil. The shares will begin trading on the New York Stock Exchange on Thursday.
Woods Staton, chief executive, who has been working with McDonald’s in Latin America since 1982, took the company on a three-week global roadshow in the lead-up to the IPO. He also purchased about 2m shares in the offering.
The sale continues a surge in US public offerings, which enjoyed the best first quarter since 2008, a nearly 200 per cent gain over the first quarter last year. US investors added $2.8bn in assets to mutual funds invested in non-US companies in the week ending April 6, according to the Investment Company Institute, the best flow since December. The sale was managed by Bank of America Merrill Lynch, JPMorgan, Morgan Stanley, Itaú BBA and Citigroup.
ZipCar, the web-based hourly car rental group, also priced an IPO on Wednesday after the market close, raising $170m in a sale of 9.5m shares – more than initially offered – at $18 a share. That was above the projected range of $14 to $16 a share. The sale was managed by Goldman Sachs and JPMorgan.
Demand for growth companies, especially in technology and consumer services, has been strong in the US this year, in addition to demand for large established groups such as Arcos Dorados and previously successful IPOs such as Kinder Morgan, HCA and Nielsen. Demand Media, the web content creation group, sold shares above its range in January, though they have since declined. Qihoo 360, a Chinese internet company, which sold shares in the US in March, saw a 134 per cent jump in price in the first day of trading.
Also on Wednesday, MGM Resorts International, the casino group, said a 20 per cent stake in its Macau casino joint venture would be sold via an IPO on the Hong Kong Stock Exchange. MGM will have 51 per cent stake; the proceeds will go to its partner, Pansy Ho, the real estate developer, who will retain a 29 per cent stake.
MGM, by boosting its stake to 51 per cent from its previous 50-50 arrangement with Ms Ho, will have management control of the group, called MGM China Holdings Limited, and allow it to include the fast-growing resort’s results in its own financial reports.
Ms Ho is in a dispute with her father, Stanley Ho, the Hong Kong tycoon, over ownership of his casino groups. MGM was forced to abandon its hotels in New Jersey because the state’s gambling commission found Ms Ho to be an “unsuitable” business partner because of her father, who is accused of having ties to organised crime. Mr Ho has denied any such ties.
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