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Banorte Sells $2.5 Billion of Stock in Biggest Mexican Offer

Grupo Financiero Banorte SAB, Mexico’s third-largest bank, sold about $2.5 billion of shares in the nation’s biggest equity sale of the year, extending a record pace of offerings in Latin America’s second-biggest economy.

The company priced 447.4 million shares yesterday in a follow-on offering at 71.5 pesos a share for a total of 32 billion pesos, David Suarez, head of investor relations for the Mexico City-based bank, said in a telephone interview from New York. In dollar terms the amount sold was $2.2 billion plus an overallotment option for underwriters, Suarez said. The deal was 3.5 times oversubscribed, he said.

Banorte proceeded with its sale as several Mexican companies have delayed or scaled back equity offerings following a rout in emerging-market assets in May and June. The benchmark IPC index of 35 stocks plunged last month to the lowest level since September 2011, and is down 9.3 percent this year. Earlier this year, Banorte was targeting a sale of as much as $3 billion based on the exchange rate at the time.

The sale “shows the appeal of Banorte to institutional investors,” Suarez said in a telephone interview from New York. “It’s very adverse market conditions. Some companies have been withdrawing their offerings.”

Pricing Discount

Banorte shares gained 6.8 percent today to 76.92 pesos as of 10:26 a.m. in Mexico City trading, the biggest gain since August 2011.

Yesterday, as the bank was pricing the sale, the IPC index tumbled 1.6 percent, the worst performance among 18 major world equity indexes tracked by Bloomberg and the biggest drop since June 20.

While the total number of shares Banorte sold was greater than the bank’s 402.5 million projection in a regulatory filing prior to the sale, the offering came at a discount to yesterday’s close of 72.21 pesos.

Mexican companies raised at least $5.5 billion this year through June in initial public offerings and follow-on sales, a record first half, according to data compiled by Bloomberg.

Banorte has said in filings it plans to use the money to pay back $800 million borrowed this year to buy a stake in Banco Bilbao Vizcaya Argentaria SA (BBVA)’s pension fund unit, as well as to finance the planned acquisition of a stake in Seguros Banorte Generali and Pensiones Banorte Generali. An additional $325 million will help pay for the repurchase of a stake in the lender from International Finance Corp.

Suarez said that 60 percent to 65 percent of the shares were bought by international investors.

To contact the reporters on this story: Jonathan Levin in Mexico City at jlevin20@bloomberg.net; Ben Bain in Mexico City at bbain2@bloomberg.net

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

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