Grupo Mexico Weighs IPOs for Units With Two Possible in 2013

Grupo Mexico SAB may hold initial public offerings for three of its divisions, with two coming as soon as this year, Chief Financial Officer Daniel Muniz said.

The company may open up as much as 25 percent of its Americas Mining unit in a share sale in London, or opt for an international offering known as a global depositary receipt, Muniz said today at the Bloomberg Mexico Economic Summit in Mexico City. The railroad division would hold an IPO later this year, followed later by the infrastructure unit, he said.

“It would create shareholder value to have a traded company in each of our divisions,” Muniz said. “We’re looking at when’s the right timing, but we’re practically ready.”

The IPOs would allow investors to more easily determine the value of the individual businesses, providing the market with a more transparent picture of how much the holding company is worth. Grupo Mexico, whose Southern Copper Corp. unit is listed in New York, trades at a 26 percent discount to the benchmark IPC index, measured in terms of its price compared to earnings.

Grupo Mexico’s railway unit has the advantage of being “totally independent” of its mining division, focusing on energy, agriculture and auto industry clients, Muniz said. The company’s infrastructure division plans to invest $1 billion this year in power plants, oil rigs and roads, while its mining division is working “very hard” on its delayed Tia Maria copper project in Peru, he said.

Copper Falls

Copper futures fell for the fourth time in five sessions, dropping 0.1 percent to $3.4435 a pound today on the Comex on signs of ample global supplies as a measure of inventory climbed to the highest in nine years.

Copper stockpiles monitored by exchanges in the U.S., London and Shanghai have surged 45 percent this year to the highest since November 2003. Refined copper production exceeded demand by 168,600 metric tons in December, the biggest surplus in six years, the International Copper Study Group said today.

Grupo Mexico fell 1 percent to 49.27 pesos today in Mexico City. Shares had climbed 6.5 percent this year through yesterday, compared with a 2.8 percent decline for the IPC.

Southern Copper’s American depositary receipts fell 0.6 percent to $35.87 in New York.

(Adds official’s comment in third, fifth paragraphs, copper price in sixth. For more Bloomberg Mexico Economic Summit coverage, see EXT3.)
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