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Banorte Jumps as $2.5 Billion Sale Sells Out: Mexico City Mover

Grupo Financiero Banorte SAB shares had tumbled in the three days leading up to
the sale, leaving them at a valuation of 12.4 times projected earnings as of yesterday's close. Photographer: Susana Gonzalez/Bloomberg
Grupo Financiero Banorte SAB shares had tumbled in the three days leading up to the sale, leaving them at a valuation of 12.4 times projected earnings as of yesterday's close. Photographer: Susana Gonzalez/Bloomberg

July 17 (Bloomberg) -- Grupo Financiero Banorte SAB, Mexico’s third-largest bank, jumped the most since 2009 after raising 32 billion pesos ($2.5 billion) in a share sale where investor demand was more than three times the amount offered.

Banorte jumped 10.7 percent to 79.73 pesos at the close in Mexico City trading. It was the biggest gainer on Mexico’s benchmark IPC index, which rose 1.5 percent.

The bank’s follow-on equity offering yesterday attracted about $8.5 billion of investor orders, or more than three times the amount sold, according to a statement late yesterday. The shares priced at 71.50 pesos each, a 1 percent discount to yesterday’s close. That compares with an average 4 percent discount for the six other Mexican follow-on offerings this year, according to data compiled by Bloomberg.

“It was a very successful placement,” Gerardo Sienra, a trader at Intercam Casa de Bolsa SA, said in a telephone interview from Mexico City.

Banorte’s sale was Mexico’s biggest equity transaction since September, when Grupo Financiero Santander Mexico SAB, the country’s fourth-largest bank, raised $4.1 billion in an initial public offering.

Investors have poured money into Mexican stocks in a bet that Latin America’s second-biggest economy stands to benefit from President Enrique Pena Nieto’s proposal to open the state-controlled energy industry to private companies.

The Banorte offering pushed equity issuance in Mexico to a record $9.18 billion this year, more than six times the total in the same period last year and surpassing the previous full-year record of $9.02 billion set in 2012.

Shares Multiple

Banorte shares had tumbled in the three days leading up to the sale, leaving them at a valuation of 12.4 times projected earnings as of yesterday’s close. That was below their average 13.8 times multiple over the past three years, according to data compiled by Bloomberg.

Some investors had sold borrowed shares in the run-up to the offering, putting pressure on Banorte’s stock price, Sienra said.

“The sellers are gone now, and after the price adjustment, Banorte’s multiples look attractive at these levels,” Sienra said.

After today’s jump in price, the shares are trading at 13.7 times projected earnings.

Banorte has said it will use the proceeds from the sale to help pay back $800 million borrowed this year to buy a stake in Banco Bilbao Vizcaya Argentaria SA’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.

Banorte, JPMorgan Chase & Co., Morgan Stanley, Bank of America Corp., Grupo BTG Pactual, Goldman Sachs Group Inc., Banco Itau BBA SA and Mitsubishi UFJ Securities USA Inc. helped carry out the transaction.

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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