This is how the Colombian, Chilean and Peruvian stock exchanges that seek to integrate are valued

RIO DE JANEIRO, BRAZIL – The idea of an integrated market seeks to gain strength with the approval of the assemblies of the stock exchanges of Colombia, Santiago, and Lima to integrate, at least for the time being, the three stock exchanges into a single company.

Creating a regional holding company grouping the three companies is considered the first step to be able to “fight” for an integrated market among the three countries.

The idea of an integrated market seeks to gain strength with the approval of the assemblies of the stock exchanges of Colombia, Santiago, and Lima to integrate, at least for the time being, the three stock exchanges into a single company.

It was agreed to present an individual valuation of each of the companies with their subsidiaries (considering their shareholdings), based on the following methodologies:

• Discounted Cash Flows (DCF)
• Multiples of comparable listed companies
• Multiples of similar precedent transactions

It was agreed to present the valuation in the local currency of each country in the form of ranges, both for the enterprise value and the equity value of each of the stock exchanges.

From the ranges obtained for the individual valuation of each of the companies, the resulting ranges for the exchange ratios between the stock exchanges were calculated in an illustrative manner.

Based on these criteria, the firm in charge established that the estimated value of the Santiago Stock Exchange would be between 155 billion Chilean pesos and 175 billion Chilean pesos.

This, at an exchange rate of US$726.4, yields a maximum value of US$240.9 million for the Chilean stock exchange.

Meanwhile, the Colombian Stock Exchange value would be between Pesos 760 billion and Pesos 850 billion. The calculations were made based on an exchange rate of US$3.611, which would give a company valuation of around US$235.4 million.

In the end, the Lima Stock Exchange was valued at between 450 million soles and 505 million Peruvian soles, or about US$137.9 million, taking into account an exchange rate of 3.66 soles to the dollar.

THIS IS HOW THE VENUE WAS DEFINED

To reach an agreement on the headquarters that the regional holding company will have, it was considered that it should be one of the three countries in question, but to choose which one, it was determined according to the following criteria: (i) perception and international rankings; (ii) other relevant factors; (iii) HR tax burden; (iv) corporate; (v) foreign exchange and foreign investment aspects; (vi) regulatory; (vii) labor; (viii) litigation; (ix) market; and (x) access to financing.

Each of the chapters analyzed was assigned a weight of importance. Perception and international rankings had a score of 50 and a weight of 40%, being the most relevant item for the measurement.

What was considered “other relevant factors” weighed 16%, as did the tax burden? Corporate issues had a percentage of 6.4%, foreign exchange, market, litigation, and regulatory matters 3.2%, while labor issues weighed 4.8%, and access to financing 4%.

Colombia was the worst performer in the overall evaluation. This was mainly due to its low score in perception and international rankings, where it had a score of 30.5. At the same time, Peru obtained 34.5 and Chile 48.

In the tax aspect, it was also the worst rated. Chile had 17 points, Peru 16.5, and Colombia 11.5. The overall balance was 81.8% for Chile, 67.8% for Peru, and 64.6% for Colombia. Thus, it was decided that Chile would be the host country.

With information from Bloomberg Latin America