Jose Cuervo Raises $790M in Biggest Mexico IPO Since 2013by
Offering said to have been about 8 times oversubscribed
Distiller said to sell 476.6m shares at 34 pesos per share
Jose Cuervo sold about $790 million of shares in Mexico’s biggest equity offering in more than three years, according to people with knowledge of the matter.
Shares of the world’s biggest tequila maker sold for 34 pesos each, the high end of the projected range, said the people, who asked not to be identified because the details are still confidential. Excluding the overallotment option, Cuervo’s $791 million offering makes it the country’s largest IPO in dollar terms since Grupo Lala raised an initial $938 million in October of 2013.
Investors sent the tequila maker orders about 8 times in excess of the offering size on Wednesday, the people said. The demand comes even as trade relations between the U.S. and Mexico remain in limbo. Some are hoping Cuervo’s success will usher in other issuers, helping to buck a slump in Mexico, where IPOs have been nearly dormant.
Fibra Resort is among the companies looking for an offering window after it froze its IPO last year. And Cementos de Chihuahua is scheduled to price a follow-on equity offering Thursday in Mexico of about 8 billion pesos ($392.2 million) at the middle of the price range, a person with knowledge of the matter said last month.
Cuervo’s IPO has been a long time coming, with Chief Executive Officer Juan Domingo Beckmann signaling since at least 2006 that a stock listing was under consideration. The distiller filed in September to sell shares but put its offering on hold after Donald Trump’s surprise victory in the U.S. election upended financial markets in Latin America, raising concerns that Jose Cuervo would be seeking to sell shares at an inopportune time.
The company is seeking to transform itself into a global spirits company and plans to use proceeds from the offering to buy "scale-able" and "premium" brands that it can use to grow its business, according to an investor roadshow presentation.
Still, the offering’s success probably says more about Cuervo than it does about investor appetite for new share offerings in Mexico. The distiller got about 64 percent of revenue from the U.S. and Canada in 2015, according to its preliminary prospectus, while its costs were in pesos. The decline in the peso since the U.S. election might make prices of the company’s products more compelling in the U.S., according to Bloomberg Intelligence analyst Julie Chariell.
Temasek holdings subsidiary Aranda committed to buying 20 percent of the offering within the price range, according to the prospectus.