Bolsa CEO Says 10 IPOs Planned as Ferromex Considers Share Sale
Mexico has 10 companies planning initial share offerings that may proceed when economic conditions improve, said Luis Tellez, chairman and chief executive officer of Bolsa Mexicana de Valores SAB, the nation’s stock exchange operator.
“They are in the pipeline and they are waiting to see when they can come out to the markets,” Tellez said in an interview yesterday. The potential issuers “have positive growth expectations” despite concerns about European debt problems and a slowing of the U.S. economy, he said, speaking at the Mexico City-based exchange.
Aerolineas ABC SA, which operates the low-cost airline Interjet, is among the companies, Tellez said. ABC “wants to tap the markets as soon as they can return and Interjet is doing very well,” he said. Citing confidentiality agreements, Tellez declined to name other companies seeking to sell shares.
ABC scrapped an IPO on June 29 because of “complex situation” in financial markets. Chairman Miguel Aleman Magnani said July 8 the company may try to sell shares again this year for less than the original target amount of $300 million.
Grupo Mexico SAB, the nation’s largest copper producer, may go ahead with an IPO of its transportation division that holds companies such as Ferromex, spokesman Juan Rebolledo said yesterday in a telephone interview in Mexico City. Ferromex is the nation’s largest railroad operator, Grupo Mexico said in its second quarter report.
Elementia SA, a manufacturer of copper and aluminum products, seeks to sell shares, according to two people with knowledge of the situation who asked not to be named because the plans are private.
Antonio del Valle, who controls chemical producer Mexichem SAB and Elementia as chairman of holding firm Grupo Empresarial Kaluz SA, said on May 30 the company plans to raise about $400 million in an IPO. He made the comments to Mexico City-based daily El Semanario.
Billionaire Carlos Slim’s Grupo Carso SAB owns a 46 percent stake in Elementia.
Grupo Alpura SA, a dairy producer, may seek to hold an IPO, said Carlos Gonzalez an analyst at Monex Casa de Bolsa SA in a telephone interview in Mexico City yesterday. Gonzalez predicted investors would be interested in Alpura because as a producer of staple goods, it wouldn’t be as vulnerable to market swings.
Alpura executives contacted by Bloomberg did not immediately respond to requests for comment.
Servicios Corporativos Javer SAPI, a homebuilder that specializes in low-income housing, will seek to hold an initial public offering, Chief Financial Officer Eugenio Garza y Garza said in a telephone interview April 26.
’Looking For Money’
“We have companies ranging from transportation to sophisticated petrochemicals or chemical companies which are looking for money,” Tellez said. One of the companies seeking to sell shares has an enterprise value of $5 billion, he said. “I can assure you there are some large ones,” Tellez said.
Mexico has had three IPOs this year after Tellez forecast last December that ten companies would sell shares in 2011. Mexico had five initial offerings last year after a 22-month drought, according to data compiled by Bloomberg.
Volatility from international markets, in part because of the default risks by European nations and the downgrade of U.S. sovereign debt by Standard & Poor’s, has hurt Mexican debt and equity markets in recent months.
Mexico’s benchmark IPC stock index, Latin America’s second largest, has lost 11 percent this year, less than the 19 percent loss by the Brazilian Bovespa, the benchmark gauge for the region’s largest exchange.
“Conditions for the rest of the year don’t look at all favorable,” said Martin Gonzalez, an equity analyst at Invex Casa de Bolsa SA in Mexico City. Potential share issuers will wait “to see what things look like in the coming year.”
The Bolsa is diversifying products such as exchange-traded funds and securities in the futures, options and swaps markets to help investors hedge against ongoing volatility, Tellez said.
The bourse has “a sophisticated supermarket of financial products” that allow investors to “hedge from economic and political risks,” he said.
Petroleos Mexicanos, the state oil company and Latin America’s largest crude producer, scrapped a proposed sale of as much as 10 billion pesos in local bonds on Sept. 13, citing “high volatility and uncertainty.” Local debt sales slowed to 7.4 billion pesos in August after a monthly average of 16.7 billion pesos during the first seven months of the year, according to data compiled by Bloomberg.
Tellez said he wasn’t concerned about Pemex’s decision to withdraw the sale. “Once market conditions are there, I think Pemex will be able to issue whatever it needs,” he said.
“I do think in terms of debt, the Mexican fundamentals are very strong at this point,” Tellez said. Political parties won’t seek to excessively raise debt levels and local pension funds have cash to invest in new issuances, he said.
For 2012, the administration of President Felipe Calderon is proposing to increase spending in real terms by 2.5 percent in 2012 while narrowing the deficit to 0.2 percent of gross domestic product.
Investors overseas have shown appetite for Mexican debt this year as the country has sought to take advantage of lower benchmark borrowing costs in the U.S. to lengthen maturities. The nation sold $1 billion of bonds due 2110 to yield 5.96 percent Aug. 10.
Mexico first sold the 100-year bonds in October, issuing $1 billion of the securities at a yield of 6.1 percent to become the only Latin American country with dollar notes of that maturity.
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