Cencosud Shopping Centers, the mall division of South American retail group Cencosud, and rival Vivo are eyeing initial public offerings in coming months to profit from a growing retail market, according to market sources.
“They [Cencosud Shopping Centers] are looking to do a bond issue and then a stock listing,” said a ratings analyst in Chile’s capital of Santiago, adding that the firm could issue more than $1 billion in notes to pay $1.4 billion in liabilities to parent company Cencosud. Cencosud operates multibrand supermarkets, department stores and home improvement centers in five South American countries.
The retailer, which competes head-to-head with compatriot Falabella, runs the Paris and the Johnson department-store chains in Chile and Peru. It also operates the Jumbo hypermarket chain across South America, which sells fragrances and beauty products but has a smaller apparel business. Paris and Johnson, which are increasing their online presence, market a string of unisex private label and well-known brands such as Opposite, Greenfield, Scokvhawai and Nike, as well as Adidas.
Following the bond, Cencosud Shopping Centers is expected to sell 30 percent of its equity to investors in March, the analyst said. While the company has not provided a target for how much it plans to raise in the sale, the analyst estimated it could be as large as rival operator Mallplaza, which listed for $530 million on Chile’s bolsa last year.
Chile’s retail market is growing on the back of a strengthening economy, prompting foreign brands to open stores. In that vein, Spain’s Zara inaugurated its largest Chilean store on Valentine’s Day — a 36,170-square-foot, two-story unit in Mall Marina de Vina del Mar in the exclusive Vina del Mar beach resort.
Meanwhile, Vivo, which operates seven high-end shopping malls, four outlets and 24 strip centers in Chile, is expected to launch its IPO in the first half, following an extraordinary shareholders meeting on March 7.
Cencosud Shopping Centers controls 53 malls and mixed properties with Santiago’s Costanera retail and office complex — billed as the home of Latin America’s highest tower — one such facility. It also owns the Plaza Lima Sur shopping center in Lima, Peru and several other shopping centers, factory malls and strip malls in Argentina, where it claims to have 40 percent of the market.
All said, the company operates 25 malls in Chile, 22 in Argentina, four in Peru and two in Colombia. It accounts for 2 percent and 21 percent of the retail group’s revenues and earnings before interest, taxes, depreciation and amortization, respectively.