Lala Surges in Mexico Trading Debut After $938 Million IPO

Grupo Lala SAB (LALAB), Mexico’s biggest dairy producer, rallied in its first day of trading after raising at least 12.2 billion pesos ($938 million) in an initial public offering.

Lala gained 7.6 percent to 29.59 pesos in Mexico City, compared with a 0.3 percent advance for the country’s benchmark IPC index of 35 companies. The stock sold for 27.50 pesos yesterday, the top of a projected price range of 23.50 pesos to 27.50 pesos. The company offered 444.4 million shares, without considering a 15 percent overallotment option for underwriters.

The company said in an investor presentation that the IPO would allow it to accelerate growth and it may use shares as a form of payment in possible acquisitions. The dairy producer employs more than 31,000 people at 17 plants and 161 distribution centers, according to the presentation, which was posted on the stock exchange website. Lala’s sales last year were 40.3 billion pesos.

Before Lala’s IPO, Mexican companies had raised a record $10.7 billion through stock sales this year, 45 percent more than the same period of 2012, according to data compiled by Bloomberg. Including the so-called greenshoe option for underwriters, the Lala sale may climb to 14.1 billion pesos, which would be Mexico’s biggest IPO since lender Grupo Financiero Santander Mexico SAB (SANMEXB)’s record offering last year. Lala represents Mexico’s 17th equity deal of 2013.

JPMorgan Chase & Co. led the transaction. Banco Bilbao Vizcaya Argentaria SA (BBVA) and Morgan Stanley were among the other banks working on the IPO.

Lala, led by Chairman Eduardo Tricio Haro, started six decades ago as a dairy farmers’ collective in northern Mexico and now has 53 percent of formally tracked milk sales in the country, according to the prospectus, which cites data from AC Nielsen.

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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