Bloomberg News

Pacasmayo Falls Most Since 2008 After New York Sale: Lima Mover

February 14, 2012

Feb. 8 (Bloomberg) -- Cementos Pacasmayo SAA declined the most in three years in Lima trading after the cement producer sold shares in New York at the lower end of a projected range.

The common shares lost 9.6 percent to 6.15 soles at 2:51 p.m. local time and earlier fell 15 percent, the biggest intraday drop since October 2008.

Pacasmayo sold 20 million depositary shares at $11.50 each or a total of $230 million in the first U.S. public share offering by a Peruvian company since 2007. The company had set an expected price range last month of $11.50 to $13. The depositary shares, which each represent five common shares, slid 3 percent to $11.15 in the first day of trading.

“Investors got scared when they saw the share priced at the bottom end of the range,” Alessandra Bazan, an analyst at brokerage Inteligo SAB, said by telephone from Lima. “Pacasmayo has promising expansion projects in cement and phosphates, so the stock should recover in the short term.”

JPMorgan Chase & Co. was the sole book runner for the public offering, Peru’s first in New York since 2007, and Banco Santander SA was the lead manager.

Pacasmayo joins New York-traded miners Southern Copper Corp. and Cia. de Minas Buenaventura SAA and financial holdings Credicorp Ltd. and Intergroup Financial Services Corp. Telefonica del Peru SAA took its ADRs off the market in 2004.

“In liquidity, New York has more than London and was best for the company,” Eduardo Hochschild, the billionaire chairman of Pacasmayo’s controlling shareholder Hochschild Group, said today in a telephone interview from New York.

‘Up, Down, Sideways’

While the share “will go up, down, sideways,” the company is supported by “substantial growth potential,” he said.

The group’s gold and silver mining company, Hochschild Mining Plc, trades in London. Hochschild raised $513 million from the London share sale in 2006.

Lima-based Pacasmayo will sell 80 percent of its 2.5 million metric tons of annual phosphates output to Mitsubishi Corp. when the mine starts in 2016 and the remainder on the domestic market, Chief Executive Officer Humberto Nadal said. Pacasmayo also plans to boost cement output by 50 percent with a 1 million ton-per-year plant, he said, without giving a timeframe.

“There’s space for expansion as we have very large reserves of phosphate rock,” Nadal said today by telephone from New York. “Growth is going to be very solid in coming years and we want to make sure we always have sufficient capacity to respond to local demand.”

Pacasmayo’s cement sales rose 16 percent to 1.8 million tons in 2010, equivalent to a 21 percent share of Peru’s cement market, according to the company’s website.

--Editors: Brendan Walsh, James Attwood.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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