LatinFinance - November/December 2014 - 8

NEWS
EQUITY

Issuance in the Mexican equity market started to recover,
but volatility forced a number of companies to put plans
to issue stock on hold. By Eduardo García

Back to life
The Latin American equity
market has staged something
of a comeback in recent weeks
after a generally subdued 2014.
There was a string of IPOs
and follow-on offerings, most
of them Mexican, after that
country's IPC benchmark rose
steadily over the second and
third quarters. It peaked at over
46,000 in early September,
which spurred a flurry of
equity sales that month.
Grupo Hotelero Santa
Fe fired the first salvo when it
issued stock representing 27.2%
of the company at 10 pesos, in
a 750 million peso ($56 million)
IPO deal managed by BanorteIxe and Santander. The shares
were trading at 9 pesos in
late October, with the stock
exchange sliding to around
43,500 in the third week of the
month.
Fibra Macquarie later
raised 4.23 billion pesos
with the sale of 180 million
certificates, excluding
overallotment options, at 23.5
pesos ($1.77) each. The allprimary equity sale came at a
4.23% discount to the shares'
closing price a day earlier, and
a 10.03% discount to the price
when the deal was launched on
September 4.
Terrafina followed suit with
a deal that was three times
over subscribed. Banamex-Citi,
HSBC, Goldman Sachs and
UBS helped the company raise
5.3 billion pesos, excluding
overallotment options.
It was a period of hits and

misses though, as poor market
conditions forced some players
to pull deals in late September
and early October.
The volatility was caused,
in part, by polls indicating
that Dilma Rousseff was likely
to win the Brazilian election,
and on the release of data that
indicated that US economic
growth was more sluggish than
expected - developments that
weighed on both Brazilian and
Mexican stock exchanges.
Mexican baker Grupo
Bimbo was heard to have
delayed a follow-on equity
sale to pay back an acquisition
loan in late September. And
poor market conditions forced
Fibra Shop to postpone
an equity follow-on in early
October. The deal could have
raised around 5.2 billion pesos
($385 million) based on the
trust's closing price at the time.
Meanwhile, Atento - a
Latin America-focused
business process outsourcer
- scaled back its IPO. It sold
11.5 million shares, including a
15% greenshoe, at $15 each in
a New York listing. It had been
seeking to sell 20.18 million
shares at $19 to $22 each.
Mexican construction
supply firm Elementia and
Brazil's T4U were also among
the companies opting to put
their equity plans on hold.
Several Mexican firms are
waiting in line and are said to
be ready to hit the market as
soon as conditions improve.
Fibra Inn plans to issue

8 L ATINFINA NCE.COM - November/December 2014

ECM rank by volume, year to October 17, 2014
Mixed performance
Rank

Bookrunner

1
2
3
4
5
6
7
8
9
10

Morgan Stanley
Citi
Credit Suisse
Itaú BBA
Grupo Aval
BTG Pactual
Bancolombia
HSBC
BofA Merrill Lynch
Goldman Sachs
Total

Value $m

# Deals

2,100
1,850
1,717
1,696
1,228
1,146
1,085
986
978
914

6
12
13
11
1
14
1
5
9
5

19,037

47

Source: Dealogic

258.3 million real estate trust
certificates (CBFIs) offered
exclusively to shareholders,
while Fibra MTY and
mortgage trust Fibhios are
also said to be planning deals
before the end of the year.
There are hopes that the
Brazilian equity market will
come back to life after a
marked slump, but its medium
term prospects hinge on the
results of one of the most
contested elections in the
country's history.
Ourofino Saude Animal
Participações raised 418
million reais ($172 million) in
the first IPO to come out of
Brazil in 2014 - although half of
the transaction was supported
by a single buyer, General
Atlantic.
A handful of Brazilian issuers
could hit the market in the next
few weeks, if the market reacts

positively to the result of the
presidential election. These
include JBS Foods, Ouro
Verde and Par Corretora.
And there is action in other
countries. Banco de Bogota
filed a shelf registration in midOctober for a follow-on equity
sale to raise 1.5 trillion pesos
($725.3 million), after a followon by its parent company,
Grupo Aval, which raised $1.3
billion through the sale of 93.7
million American Depository
Receipts, in September.
Last but not least, Chilean
packaging company Tech
Pack opened a share sale to
raise around $150 millionequivalent through a followon sale that was expected to
close at the end of October,
and whose proceeds are
earmarked for the company's
expansion plans in Brazil and
Mexico. LF
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