Banorte Said to Seek $2 Billion in Mexican Share Offering

Grupo Financiero Banorte SAB (GFNORTEO), Mexico’s third-largest lender, plans to raise about $2 billion through a share offering this year, according to two people with direct knowledge of the transaction.

The issuance of additional shares by publicly-traded Banorte is likely to take place in the coming months and will mostly consist of new equity, said the people, who asked not to be named because the details are still private. The amount and timing are subject to change, and the bank could still alter its plans, they said.

Banorte borrowed $800 million this year from a group of banks including Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. to help finance the purchase of Banco Bilbao Vizcaya Argentaria SA (BBVA)’s pension-fund unit alongside a state-owned agency. Banorte and Mexico’s Social Security Institute, known as IMSS, each agreed last year to pay half of the $1.6 billion price tag for the Afore Bancomer fund.

A Banorte share sale would lure “very good demand, above all from foreigners who have shown a lot of interest,” Gerardo Sienra, a trader at Intercam Casa de Bolsa SA, said in a telephone interview from Mexico City.

Alejandro Vazquez, a spokesman for Mexico City-based Banorte, said the bank is analyzing different financing options and it isn’t planning a $2 billion share sale at this time. Any decision on a share sale depends on market conditions, he said.

Shares Fall

Banorte shares fell 4.2 percent to 91.40 pesos at the close of trading in Mexico City. The shares have climbed 61 percent in the past 12 months. At the current price, the bank has a market capitalization of 212.6 billion pesos ($17 billion), according to data compiled by Bloomberg.

Mexican stock issuance has surged this year as President Enrique Pena Nieto’s four month-old government pushes for economic reforms including reducing the power of dominant telephone and television companies and opening the nation’s energy sector to more private investment. Companies have raised more than $4.4 billion in Mexican share sales this year, six times the amount in the same period of 2012, according to data compiled by Bloomberg.

Mexico’s third-biggest airline, Concesionaria Vuela Cia. de Aviacion SA, known as Volaris, has hired banks to help it carry out an initial public offering this year, according to two people with knowledge of the deal. Grupo Hotelero Santa Fe, a Mexican hotel operator part owned by private equity firm Nexxus Capital SC, is also among companies seeking to go public, according to people with knowledge of that transaction.

Grupo Financiero Santander Mexico SAB (SANMEXB), the Mexican unit of Spain’s biggest bank, raised $4.1 billion last year in a record share offering for the Mexican market.

To contact the reporter on this story: Jonathan Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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