Banorte Seeks $3 Billion in Biggest Mexico Offering in 2013

Grupo Financiero Banorte SAB (GFNORTEO), Mexico’s third-largest bank, plans to raise as much as $3 billion in the market’s biggest stock offering of the year as the company expands through acquisitions.

The lender plans to carry out the follow-on offering as soon as it obtains the necessary authorizations, according to a regulatory filing today. The sale is subject to market conditions, the bank said. Banorte shares plunged 4.3 percent to 78.07 pesos at the close of trading in Mexico City, leading the benchmark IPC index to a 1 percent drop.

“The stock will remain under pressure in the short-term” as investors brace for the additional supply from the sale, Aldo Miranda, a trader with Intercam Casa de Bolsa SA, said in a telephone interview from Mexico City. “In the long-term, I like the growth story. There’s strong appetite for financial industry stocks.”

The offering adds to a record pace for equity issuance in Latin America’s second-biggest market. Last year, Banco Santander SA’s Mexico unit raised $4.1 billion through a share sale as investors sought exposure to an economy the government says could grow 6 percent after a series of planned policy overhauls, including opening the energy industry to increased private investment.

Photographer: Susana Gonzalez/Bloomberg

Pedestrians pass by a Banorte branch in Mexico City on Feb. 27, 2013. Close

Pedestrians pass by a Banorte branch in Mexico City on Feb. 27, 2013.

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Photographer: Susana Gonzalez/Bloomberg

Pedestrians pass by a Banorte branch in Mexico City on Feb. 27, 2013.

‘Very Attractive’

The $3 billion transaction represents about a fifth of the company’s 181.6 billion peso ($14 billion) market capitalization.

The offering will include new equity issued through the Mexican stock exchange and a private sale abroad, according to the statement.

Banorte said yesterday it agreed to buy stakes in Seguros Banorte Generali and Pensiones Banorte Generali for $857.5 million from Assicurazioni Generali SpA. (G)

The bank borrowed $800 million earlier this year from a group of lenders including Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. to help finance its purchase of a stake in Banco Bilbao Vizcaya Argentaria SA (BBVA)’s pension fund unit. Mexico City-based 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 pension fund.

Ayax Carranza, a press official with Banorte, declined to comment on how the bank plans to use of the proceeds.

The lender was considering a sale of about $2 billion worth of shares earlier in the year, people with direct knowledge of the situation said April 5, asking not be named because the details were still private.

Andres Audiffred, an analyst with Grupo Financiero Ve Por Mas SA who recommends buying the stock, wrote in a report today that the selloff triggered by the sale plans has been overdone and made the current share price “very attractive.”

Banorte has fallen 21 percent from a record high reached on March 14.

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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