Chile: Larrain Vial sets up in the US

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Better access offered to foreign institutional investors; IPOs a tempting prospect in Chile

Claudio Larrain, Larrain Vial

"I think registration in the US will open more doors for us"

Claudio Larrain, Larrain Vial

Larrain Vial, the leading Chilean investment bank and asset manager, has become the country’s first financial group to register a broker-dealer affiliate in the US, a move that should help it to attract more international clients.

In August, the Financial Industry Regulatory Authority (Finra), which regulates all 4,700 brokerage firms that operate in the US, admitted the firm as a member. It will trade under the name Larrain Vial Securities US.

The firm, which has $12.5 billion of assets, is one of Chile’s most important independent investment banks and has 76 years’ experience in the Chilean market. It had a 17% market share of all equity operations carried out on the Santiago Stock Exchange between January and June this year.

"The arrival of Larrain Vial Securities in the largest and most important capital market in the world will bring significant and beneficial changes to Larrain Vial Group and to our clients," says Claudio Larrain, the firm’s managing director. "All internal risk controls and processes have been made even more exhaustive. We are a formal company and we like to be regulated by the local regulators wherever we operate."

The firm will offer its clients access to the best available technology in the industry. It will not open a brokerage office in the US yet but will operate from its head office in the El Golf neighbourhood of Santiago, the Chilean capital.

Until now, seven executives who operate in its securities division have passed a series of certifications to become accredited and approved by Finra. Larrain Vial expects that number to reach 15 by the end of the year.

"I think registration in the US will open more doors for us," adds Larrain. "Many people on the buy side in the US wanted to be assured of the least minimum risk when trading in local markets. Having a broker-dealership in the US certainly helps with this."

It will be able to offer important international institutional clients an efficient execution process and provide them with research and value analysis for securities in the main Latin American markets. Since 2004, the firm has expanded into Peru, Colombia, Mexico and Brazil and will be able to offer clients full research on securities in those countries.

"Larrain Vial is now established as a leading financial services group of regional significance," says Larrain. "With this step, US institutional investors will have access to the reports prepared by the research department of Larrain Vial Corredora de Bolsa, our local brokerage."

The firm reports that the IPO market in Chile is picking up after an eight-month hiatus and it is advising three companies – described as medium to big – that wish to go public within the next 12 months. Cruzados SADP, which runs Universidad Católica, one of the country’s most popular soccer teams, undertook the last IPO in December and raised $25 million.

Valuations in the Chilean market are becoming highly tempting for local firms to carry out IPOs – the country’s Ipsa index has rocketed by more than 25% this year. It is understood that one of the companies it is advising on a public offering is Laboratorios Recalcine, a Chilean pharmaceuticals company.

Larrain Vial has also teamed up with HarbourVest Partners to raise $500 million from institutional clients in Chile, Peru, Colombia and Mexico for a private equity fund of funds to invest in advanced economies. At the start of the year, it secured a similar sum for a global private equity fund in partnership with Blackstone.