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Mexico eyes record IPOs before election season slowdown: sources
September 26, 2017 / 9:44 PM / in 21 days

Mexico eyes record IPOs before election season slowdown: sources

A screen displays foreign exchange outside Mexico's stock exchange building in Mexico City, Mexico November 18, 2016. REUTERS/Henry Romero

MEXICO CITY (Reuters) - As many as 10 companies could list on Mexico’s stock exchange by the end of 2017, sources from the exchange said, potentially marking a record year ahead of slower expected activity in 2018 due to Mexico’s elections.

Since January, four companies have listed in Mexico, raising a combined $2.1 billion in initial public offerings (IPOs).

In addition, Sigma Alimentos, a unit of industrial conglomerate Grupo Alfa (ALFAA.MX), and Traxion, a transportation company controlled by private equity funds Nexxus and Discovery Americas, this week confirmed their IPOs.

In October, Banco Mifel is expected to launch its IPO, as is the transportation subsidiary of Mexican miner Grupo Mexico (GMEXICOB.MX).

Two more companies are considering IPOs, said one of the two sources, who declined to be named citing confidentiality.

In 2013, a record year, Mexico added nine new companies to its bourse.

“A committee within the Mexican stock exchange is created for each new listing, and we’ve never had as many committees as we have this year,” said one source.

The pace of IPOs in Mexico typically slows during an election year, and some investors are especially wary of the current front-runner for next July’s presidential contest, leftist hopeful Andres Manuel Lopez Obrador.

The four new listings named above have not been affected by the massive earthquake that struck Mexico City on Sept. 19 and killed more than 330 people, market sources involved in the transactions said.

Sigma aims to raise about 18.5 billion pesos ($1.03 billion) while Traxion expects around 4.32 billion pesos.

If all the planned IPOs take place, Mexico could also break its 2012 record amount raised, which according to consultancy firm Dealogic stood at $6.8 billion, mostly driven by the $4 billion listing in 2012 of Spanish bank Santander (SANMEXB.MX).

Tequila maker Jose Cuervo (CUERVO.MX) raised $900 million, Mexican energy investment firm Vista Oil & Gas (VISTAA.MX) raised $650 million, Banco del Bajio (BBAJIOO.MX) raised $482 million, and Mexican real estate investment trust (REIT) Fibra Nova (FNOVA17.MX) raised $68 million.

Juan Manuel Olivo, head of promotion and issuers for the Mexican stock exchange, said the IPO spike this year is primarily due to stable economic conditions, new business opportunities that require capital and attractive valuations.

He said the Mexican stock exchange has also stepped up efforts to better inform companies of their financing options, which also include issuing debt and new real estate investment trusts known locally as Fibras.

“In the last 18 months, more (financing) instruments have been created that in the previous 10 years,” said Olivo.

($1 = 17.9540 Mexican pesos)

Reporting by Skeky Espejo; Writing by David Alire Garcia; Editing by Lisa Shumaker

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