MEXICO CITY Carlos Slim's retailer Sanborns raised about $930 million in its public listing, but shares made a lackluster debut on Friday amid concerns that investors may have paid too much for a piece of the world's richest man.
Slim, who tops Forbes' list of billionaires, re-listed Sanborns in the midst of a global frenzy for Mexican stocks, which have set successive all-time highs since last year on a surge of foreign inflows.
Sanborns' offering priced at the low end of guidance, putting the cafe and retail chain on track to raise about 11.8 billion pesos, if the greenshoe overallotment is exercised, the company said in a filing with the Mexican exchange.
The deal valued Sanborns, which is majority controlled by Slim, at more than $5 billion, according to Reuters calculations.
Global investors appeared less interested than expected in the deal, which was aimed at financing an expansion of the chain and was snapped up mostly by Mexicans.
"It did not come at a discount, let's put it that way," said Santiago, Chile-based Stacy Steimel, who helps manage $600 million in Latin American stocks at PineBridge Investments.
Slim controls a business empire that includes Latin America's biggest telecommunications company, America Movil (AMXL.MX), as well as banking, construction, real estate and mining companies.
Grupo Sanborns operates coffee shops, restaurants, and department and music stores across Mexico. It runs Sears stores in Mexico and brought Saks Fifth Avenue to the country. Slim is a top shareholder in Saks Inc SKS.N.
The company earned nearly 3 billion Mexican pesos ($236 million) last year, up from 2.7 billion pesos in 2011.
Mexican stocks are trading at very high valuations on record inflows. Mexican companies took advantage of the tide to place around $3 billion so far this year, including Sanborns, the strongest start of the year for the local market in decades.
However, investors are becoming leery that prices may have risen beyond the real prospects for growth in Latin America's second-biggest economy, which has outpaced regional powerhouse Brazil for the last two years.
Starved by low interest rates in major economies, foreign investors are piling into riskier assets around the world. Mexico's market has been one of the top gainers, helped by solid growth and bets a new government will pass key economic reforms.
Sanborns' stock price rose sharply at the session open only to slip and then climb back to trade just above its 28-peso-per share price in Thursday's offering.
"This is not a good omen," said Gerardo Roman, head of trading at brokerage Actinver in Mexico City. "A lot of people are already looking to sell."
The banks running the Sanborns offering placed about 60 percent with Mexican investors and 40 percent with global players. That was below a 50-50 split the offering was aiming for in its prospectus.
Analysts said if the heavy Mexican skew was comprised mostly of buy-and-hold pension funds, it could limit the shares' liquidity and prospects for gains.
Sanborns shares on the Mexican exchange (GSNBRB1.MX) rose 1.4 percent to 28.40 pesos per share after falling to as low as 27.70 pesos and rising as high as 29 pesos.
The price was at the lower end of the expectations. The prospectus had a range of 27 to 32 pesos per share.
Sanborns de-listed last decade after being incorporated into Slim's conglomerate Grupo Carso (GCARSOA1.MX).
Sanborns tracks its origin to a small drug store founded in downtown Mexico City in 1903 by American brothers Walter and Frank Sanborn.
The small business added a soda fountain that quickly drew an eclectic crowd, from Mexican President Porfirio Diaz, who was fond of sundaes and banana splits, to revolutionary leaders Pancho Villa and Emiliano Zapata, who went in for hot cocoa.
The coffee shop chain is now a ubiquitous feature of upper-middle class neighborhoods across Mexico.
(Additonal reporting by Tomas Sarmiento and Lorena Seguro; Editing by Nick Zieminski and Jim Marshall)