Financial Times: Chile’s Saieh goes shopping

Chile’s economic strength and robust domestic demand makes it a fine time for retailers to go shopping themselves.

While some, like giant Cencosud, have been looking abroad, the business, real estate and financial holding Saieh has focused closer to home.

The group, whose SMU holding controls the country’s third-biggest supermarket chain, has agreed to pay $33m for a busy shopping centre in the capital Santiago, where it plans to put a supermarket, offices or a hotel.

The group run by businessman Alvaro Saieh – a prominent Chilean economist, arts patron and one of the so-called “Chicago boys” who pioneered Chile’s economic reform in the 1970s under dictator August Pinochet – has time to chew over its options. The purchase, from insurer Mapfre, does not have to be finalised for another two months.

But Saieh, whose assets include the Corpbanca bank and the Four Seasons hotel in Buenos Aires, the Four Seasons in Carmelo (Uruguay) and the Grand Hyatt in Santiago, appears busy to pounce on opportunities lately. In January, it closed a deal to buy do-it-yourself chain ConstruMart, to marry it to SMU’s Unimarc supermarket chain, the country’s third-biggest by sales.

It has also teamed up wtih Enap, the Chilean state-owned energy group, and the Romero group of Peru, in a bid worth some $500m for Royal Dutch/Shell’s 376 petrol stations in Chile. The bid has run into controversy after a gas distributors association argued it would undermine competition.

As this Central Bank graph shows (on page 14), retail sales – especially of cars and other durable goods – have been soaring since Chile’s recession in 2009.

Chile has recovered speedily in spite of a giant earthquake early last year. Growth in 2010 is expected to come in at more than 5 per cent, its highest in five years.

Against that backdrop, SMU is planning an IPO this year. Last year, just one company, salmon producer Pesquera Camanchaca, listed in Santiago. SMU is also planning a bond issue in the first half of 2011.

The cloud on the horizon in Chile is inflation, which has been inching up and is seen hitting 4 per cent this year after 3 per cent in 2010. That, and brisk domestic demand is widely expected to spark a 25 point rise in the Central Bank’s benchmark rate on February 16. But that would take rates to a still stimulative 3.5 per cent.

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