Chilean retailer Cencosud is considering boosting the size of the initial public offering for its Cencosud Shopping Mall division by 30 percent to $1.3 billion as it works to grow its business to take on Falabella. The latter recently warned it may close “mature stores” in Chile or Argentina as it works to increase online sales.

Santiago-based Cencosud, which runs the hypermarket chain Jumbo and department-stores Paris and Johnson in the Andean region, is also looking to sell non-key assets to improve its debt rating and pare future borrowing costs.

“If they can’t get $1 billion by selling 20 percent to 30 percent [of the shopping mall division], they might increase [the IPO] to 33 percent and/or sell nonstrategic assets,” said an analyst in Santiago.

Struggling Cencosud, the shares of which are down 30 percent in the past year, might have to pay a higher premium to get investors to buy its shares, more perhaps than what Mallplaza, a unit of Falabella, had to pay when it floated and raised just over $530 million in 2018, the analyst added.

“If Mallplaza IPO-ed at seven times [earnings before interest, tax, depreciation and amortization], Cencosud will have to do so at 6.5 times,” the analyst said, adding that the retailer is still figuring out how to structure the offer, set for April.

Operating 1,100 stores and 54 malls, Cencosud recently raised $100 million from the sale of a 51 percent stake in its Peruvian financing unit and is looking to dispose of real estate and other assets to cut debt to four times EBITDA by the end of 2019, down from 5.3 times currently, according to analysts.

Cencosud Shopping Mall, which operates 53 shopping centers across Chile, Argentina, Peru and Colombia, is said to be worth $4 billion. The unit, however, does not run Costanera Center, a major mixed retail complex and home to Latin America’s largest office tower, the crown jewel of Cencosud’s retail empire.

Meanwhile, Falabella, which operates rival department stores in Chile, Peru, Colombia and Argentina, said in late February that it may close underperforming units in Chile and Argentina to boost online sales after purchasing Linio last year. Chief executive officer Gustavo Bottazini’s comments came after the retailer surprised the market by selling a major store in Buenos Aires amid the country’s prolonged economic malaise. In 2018, the chain reported a 6.1 percent net profit decline to roughly $736 million on sales up 3.4 percent to $13.7 billion.

Meanwhile in Brazil, mall operators Aliansce Shopping Centers and Sonae Sierra Brasil are expected to wrap up talks to merge next month in a transaction that could create a $2.5 billion-plus company. Their plans come as many mall operators have seen their fortunes recover as Brazil’s economy firms up.

“Aliansce and Sonae have been in talks for a long time and a deal between them makes a lot of sense,” said Banco do Brasil analyst Georgia Jorge. “Aliansce has 20 malls and Sonae around 15 or 16 so they could become as large as BR Malls, which has 39.”