LatinFinance - July/August 2014 - 6

Mexicans are taking advantage of investors' improving
view on LatAm equities, but issuers must still proceed with caution.
By Katie Llanos-Small

NEWS
EQUITY

Staging a comeback
Mexican companies found
equity markets warming to
them in the second quarter,
with Alsea, Fibra Prologis and
Fibra Uno all closing successful
capital raises in June.
The deals follow a sour start
to the year for Latin America's
equity markets, spurred by
an investor stampede out of
emerging market funds - a
trend that has since ended.
"Equity outflows from
emerging markets in the
first quarter were somewhat
exaggerated both in quantity
and relative to recent history,
and we've started to see
a rebound in the second
quarter, a kind of pendulum
swing, especially in LatAm,"
said Mariano Espada, head of
equity capital markets for Latin
America at UBS.
"Some of that is being
channeled, as we speak, into
specific emerging market
countries. That's one of several
reasons why Fibra Uno's follow
on was so successful. People
want to put money to work,
and Mexico right now ticks all
the boxes."
Yet others noted that the
primary markets were far from
overheating. The "obvious,
liquid names" were tapping
investors for new equity, said
another banker: "In terms of
IPOs, where you really measure
the health of the market, we're
not there yet."
Still, the market happily
digested the second IPO of the
year, when Fibra Prologis

6 L ATINFINA NCE.COM - July/August 2014

became the eighth Mexican real
estate fund to list. It priced a 6.9
billion peso ($541 million) IPO in
early June.
US-based Prologis listed
the Mexican real estate trust,
a move it had first signaled in
October. The deal came at 27
pesos ($2.09) per certificate,
towards the tighter end of 26
pesos to 29 pesos guidance.
Fibra Uno, the largest of the
asset class, expanded further
with a 32.8 billion peso followon in mid-June. The deal is
thought to be the country's
largest such transaction, on a
par with Banorte's 31.92 billion
peso follow-on in July 2013.
Investors from outside
Mexico bought two-thirds of the
deal, although they are heard to
have made up an even greater
share of the demand.
The deal was said to be
several times subscribed,
pushing bookrunners to
allocate the hot issue and
greenshoe overallotment
options. The real estate trust
ultimately issued 800.4 million
certificates at 41 pesos each.
High expectations for
Mexico's macro-economic
potential helped spur the deal.
Fibra Uno has a large holding
of industrial properties in
Mexico, which are expected to
generate increasing demand as
the country's energy and other
reforms advance. The liquidity
of the stock - it was the first
Mexican Fibra to list and is the
one with the largest market
capitalization - made large

ECM rank by volume, year to June 30, 2014
Morgan Stanley's three winning deals
Rank

Bookrunner

Value $m

# Deals

1
2
3
4
5
6
7
8
9
10

Morgan Stanley
Credit Suisse
Grupo Aval
Bancolombia
Citi
HSBC
BTG Pactual
Itaú
BofA Merrill Lynch
Santander

1,668
1,494
1,228
1,085
1,081
769
748
734
643
615

3
10
1
1
6
3
8
4
6
2

Total

4,376

13

Source: Dealogic

international investors more
comfortable on participating,
LatinFinance heard.
The certificates traded up
after the sale, and sat just above
45 pesos in late June.
Restaurateur Alsea
continued the momentum in
late June, raising 6.9 billion
pesos in a heavily-subscribed
follow-on deal. The food chain
operator was raising capital to
take out debt used to buy the
Vips brand in 2013. The sale
was priced at 45.75 pesos a
share, a 0.8% discount to the
previous day's close.
Regional investors -
particularly Chilean pension
funds and Brazilian longonly and multimercado
funds - were heard to
make up a substantial part
of the international book,
underscoring increasing crossLatAm capital flows.
Mexican infrastructure

developer Pinfra may be next
up. Shareholders were due to
vote on a capital raise at the
end of June.
In Brazil, protein company
JBS's carve out of JBS Foods
was heard to be scheduled for
after the summer, potentially
as soon as September. The
company had not previously
set a pricing date although
it had been heard to want to
wrap up the deal in July.
Elsewhere, online retailer
MercadoLibre raised $300
million from a convertible
bond sale. The convert was
priced with a 2.25% coupon,
and offered a 35% conversion
premium. The deal is
understood to have attracted
interest from convertible
bond investors as well as
international equity buyers.
The rarity of Latin American
convertible bonds is thought to
have helped drive demand. LF
http://www.LATINFINANCE.COM
LatinFinance - July/August 2014

Table of Contents for the Digital Edition of LatinFinance - July/August 2014
