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IPOVIEW-Santander unit shows US investors' hope for Latam growth
Sept 21 |
Sept 21 (Reuters) - The upcoming initial public offering of Banco Santander SA's Mexican unit is the latest sign Latin American companies are being drawn to U.S. exchanges as investors bet on emerging market growth.
The Spanish bank hopes to raise as much as 3.4 billion euros ($4.28 billion) next week in one of the largest IPOs of the year.
Gross domestic product for the Latin American region is expected to expand 3.7 percent this year, according to the International Monetary Fund. Mexico is seen growing 3.6 percent, while Colombia and Peru are forecast growing 4.7 percent and 5.5 percent, respectively.
The United States is likely to grow just over 2 percent.
"There is appetite from U.S. investors who want to diversify their portfolios and want to invest in regions that are vibrant and growing," said Alex Ibrahim, vice president and regional head of Latin America, Bermuda and the Caribbean for the global corporate client group of NYSE Euronext. "Latin America is delivering that."
Besides Santander, banks like BBVA's Mexican arm Bancomer are also likely candidates for a dual listing, according to bankers.
Some technology firms are also reported to be exploring a U.S. listing, including Argentina-based software company Globant. The company has more than 2,500 employees, secured funding from U.S. venture firms, and Netflix Inc's chief executive has joined the board.
Globant could not be reached for comment.
Peixe Urbano has also been reported as a possible IPO candidate down the road. Morgan Stanley Investment Management and T. Rowe Price Group Inc has invested in Brazil's largest daily deal website.
A Peixe Urbano spokeswoman said the company is not currently exploring going public.
In 2011, there were just two U.S. IPOs by Latin American companies: Arcos Dorados Holdings Inc, a Buenos Aires-based operator of McDonald's Corp restaurants in Latin America, and Adecoagro SA, a South American agricultural company with farms across Brazil, Argentina and Uruguay. There were no U.S. IPOs from the region in 2010.
Santander is the third Latin American company to raise capital in the U.S. so far this year, either through listing common shares or American depositary shares, according to Ipreo, which provides capital markets data.
Santander's Mexico unit, which kicks in about 12 percent of total profits, will be the largest share offering of a Mexican company since 1991, when billionaire Carlos Slim's telecommunications company Telmex listed in a $2.2 billion flotation.
The Mexican banking sector is especially attractive to investors as it is largely underdeveloped, compared to other nations in Latin America.
"In the Latin American market, it's easier to get excited about the long-term growth potential prospects with a rapidly growing middle class and a younger population," said Nick Cowley, fund manager of the Latin America part of the Henderson Emerging Markets Opportunities Fund.
But not all Latin American companies are getting the same reception.
Chilean multibrand retailer Cencosud SA, which went public in June 2012, cut its IPO size by more than one-quarter before raising $474 million. Its shares are up nearly 11 percent since then.
Shares of Adecoagro, which went public in January 2011, have risen 22 percent since the beginning of the year.
But Arcos Dorodos has fallen over 45 percent since the beginning of the year on inflation worries and slowed growth in its main market, Brazil.
Still, U.S. investors have been drawn to Latin America in the past year and a half due to increased stability in capital markets and government fiscal policies, said Candice Teruszkin, regional head of Latin American ADRs at JPMorgan Chase & Co.
"Investors feel very comfortable with the political and social situation and the high returns they have received," she said.
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