Peru Bourse Predicts End of IPO Drought as Humala Backs Private Investment
Peru may have its busiest year of initial public offerings in at least a decade as the government’s defense of private investment and growth bolsters investors’ sentiment, according to the head of the country’s main securities exchange.
Companies from the mining, construction and agricultural industries may sell shares for the first time in Peru next year, said Francis Stenning, chief executive officer of Bolsa de Valores de Lima.
“We expect a very active market for IPOs next year,” Stenning said yesterday in an interview from the exchange. “Peru’s expansion is putting pressure on companies to come to the market to fund their growth. We just need to clear a few things from the table.”
Peru’s President Ollanta Humala, who took office July 28, has shown his willingness to preserve policies that fueled the fastest economic growth in Latin America over the past decade by quelling protests against a $4.8 billion gold mine being developed by Newmont Mining Corp., Stenning said. The protests, in a country where mining stocks dominate the market, have added to concern that Europe’s deepening debt crisis would slow growth, he said.
IPOs planned for this year in Peru didn’t proceed because of concern generated by the presidential elections and anti- mining protests, and as Europe’s crisis threatened to crimp global demand for commodities, Stenning said.
Port operator Andino Investment Holding SA plans to raise about $70 million in January, in what would be Peru’s first IPO since fishmeal producer Pesquera Exalmar SAA (EXALMAC1) sold $100 million of stock in November last year. State-owned companies including Petroleos del Peru SA probably will proceed with the sale of minority stakes in the first half of 2012, Stenning said.
Rising public and private investment will fuel 5.5 percent growth in Peru next year, the fastest in the region, after 6.8 percent expansion this year, central bank President Julio Velarde said Dec. 16. South America’s sixth-largest economy has grown an average 6.4 percent annually in the last decade.
The Lima General Index (IGBVL) retreated 0.1 percent to 19,358.83 at 11:17 a.m. local time and has slid 17 percent this year. The gauge plunged a record 12 percent June 6 after Humala won the country’s presidential election, sparking concern he would increase state control of the economy. Stocks rose 10 percent in the two weeks after he asked Velarde to remain in his post July 17.
Humala replaced 10 ministers in his cabinet Dec. 11 as he seeks to speed up the resolution of social conflicts slowing investment in new mines. Peru is the world’s top silver producer, number three in copper and sixth in gold.
“The president has sent a clear message that investment is not going to stop,” Stenning said. “The best way to accomplish social inclusion is with more investment and employment.”
Bolsa de Valores de Lima plans to implement a new trading platform to boost volume and allow for further integration with Latin American bourses, Stenning said. The exchange has started talks with prospective providers of a system that would permit high-speed and algorithm trading and may be modeled on a platform created by the Santiago bourse last year.
“We expect to have approved the providers, signed the contract and begun the works for implementation” next year, he said.
The project would help “homogenize” systems used in Mila, the stock market combination formed by Chile, Colombia and Peru, Stenning said, declining to give investment estimates. Mila began allowing investors to buy and sell stocks in the other two countries through their local brokers in May. In a subsequent stage, the member exchanges may form a single trading platform. Mexico is considering joining Mila.
Bolsa de Valores de Lima also plans to introduce direct market access to its current platform in the first half of next year, he said.
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