* See Brazil, Mexico equity valuation gap for up to two
* Brazil seen slowly recovering confidence
By Guillermo Parra-Bernal
SAO PAULO, Dec 4 A couple of "emblematic"
initial public offerings in Mexico will be launched next year,
paving the way for more capital markets deals as Latin America's
No. 2 economy steals investor attention from regional powerhouse
Brazil, bankers at Credit Suisse Group said on Tuesday.
IPO activity in Mexico is likely to take place in sectors
where such transactions are not too common, Marcelo Kayath, the
bank's head of fixed-income and equities for Latin America, said
on Tuesday. Kayath declined to elaborate on the transactions,
only saying that he expects both deals to be made public early
"Mexico will be in the spotlight," Kayath told reporters at
a luncheon at the bank's headquarters in São Paulo. "The
pipeline is rather promising, but those two deals you will see
are emblematic - they will give a lot of depth to the market in
Activity will gather steam in the commercial and upscale
residential real estate sectors, as well as consumer goods and
energy - an industry in which investors expect newly sworn-in
President Enrique Peña Nieto to ease restrictions on the
participation of private investors, Kayath noted.
Kayath's remarks highlight the growing importance of Mexico
as a magnet for foreign investment after years of lackluster
performance. In recent months, capital inflows toward Mexico's
bond and stock markets have topped those into Brazil, partly on
optimism that Peña Nieto will push forward with market-friendly
Meanwhile, in Brazil, where IPO activity this year fell to a
seven-year low, 2013 will be "a year in which confidence will be
restored," said Kayath and other bankers, including José Olympio
Pereira, the chief executive of Credit Suisse's Brazilian unit.
"I'm optimistic because of the high-quality pipeline of
deals that is there. We hope that appetite for Brazil
investments continues to increase among all types of investors,"
Mergers and acquisitions deals in Brazil will likely remain
at a healthy pace next year, Pereira said, noting that "our
global M&A team is constantly reaching out to us for support and
advice - Brazil remains on the radar of the investment
Equity markets in Brazil and Mexico, where valuations are up
an average 20 percent from a year ago, are showing dissimilar
trends, bankers said. For Mexico, such "re-rating" has taken
place on optimism of an improved business outlook and more
promising better long-term growth prospects, they said.
In the case of Brazil, the increase in valuations has been
greater than in Mexico but for less benign reasons - stock
prices have not declined at the same pace as the decline in
earnings estimates despite weaker-than-expected growth, rising
state meddling in some industries and the impact of the global
The divergences between both markets "won't be corrected in
the short term but maybe in a horizon of 18 months to 24
months," Kayath added.
(Reporting by Guillermo Parra-Bernal; Editing by Phil