Tiger Global to invest up to $500 million in Brazil online retailer B2W

12-Feb-2014

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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From Reuters,

Tiger Global Management LLC, the investment firm managed by industry mogul Chase Coleman, plans to spend up to 1.2 billion reais ($500 million) to buy a stake in Brazilian online retailer B2W Companhia Digital, in a bet that e-commerce will keep booming in Latin America’s largest economy.

Brazilian retailer Lojas Americanas SA, B2W’s largest shareholder with a 62.2 percent stake, and two funds overseen by Tiger Global will jointly inject 2.38 billion reais into B2W, according to a late Friday [Jan. 24] securities filing. Tiger and Lojas agreed to subscribe to 95.2 million of B2W shares at 25 reais each, 61 percent above the stock’s Friday closing price.

Lojas Americanas, Brazil’s No. 1 discount retailer, agreed to purchase a minimum 1.021 billion reais of new shares in B2W while Tiger Global will purchase between 459.2 million reais and 1.2 billion reais worth of B2W stock, the filing said. At the end of the transaction, which requires regulatory approval, Lojas Americanas will remain B2W’s top shareholder.

In recent years, Tiger Global has taken advantage of rapid growth in online commerce retail operations in China and Brazil, the world’s two largest emerging market economies. Some of Tiger Global’s investments in Brazil include online sports retail company Netshoes, Groupon Inc. rival Peixe Urbano, and social game developer Vostu.

Coleman, 38, is one of the so-called “Tiger Cubs” – asset managers whose start was sponsored by hedge fund industry legend Julian Robertson. Coleman, a former technology analyst for Robertson’s Tiger Management, has built Tiger Global into a firm with over $11 billion in assets under management, thanks to, among other strategies, investing in internet companies before they sell shares to the public.

While Brazil’s e-commerce market is expected to grow an average 18 percent annually by 2016, according to several consulting firms including E-bit and A.T. Kearney, some issues linger for online retailers. B2W, the largest Brazilian online retailer, has struggled over the past two years as a result of intense competition, eroding profitability and onerous upfront investment in technology to build up scale and improve customer service.

Shares of B2W are down 4.4 percent over the past 12 months.

With local interest rates at their highest level in about two years, household leverage peaking and persistently high inflation eating up disposable income, Brazil’s leading online retailers are likely to post a net loss this year, according to Irma Sgarz, a Goldman Sachs Group retail analyst in Brazil.

Investors may react positively to the capital plan “since the subscription price was set at a large premium to B2W’s current share price, avoiding dilution,” said Marcel Moraes, a retail analyst with Deutsche Bank Securities. “On top of that, it should also reduce the concern over credit risk.”

Minority shareholders should be granted preemptive rights. Those not participating could have their stakes diluted by about 38 percent, the filing noted.

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