IEnova IPO Hits Top of the Range

Infraestructura Energetica Nova (IEnova) has priced its IPO at the top of the range, and expected to raise MXP7.41bn ($596m) after getting at least eight times demand, according to people following the transaction. The first-ever IPO in Mexico’s energy sector offered 218m primary shares at MXP34.00, coming against a MXP30.00-MXP34.00 range. The share total includes an expected greenshoe option. The Mexican unit of Sempra Energy is seen as having a strong foothold in the country’s gas distribution and electricity generation sectors, allowing it to benefit from any reforms coming from efforts of the new presidential administration. Investors weighed the strengths against the chance that reform is limited, and uncertainties surrounding the natural gas import picture in North America. “The story of Sempra Mexico is not the Costa Azul LNG [import terminal] project. The story is the distribution assets and larger pipelines. They are in a plum position to bid and self-build because they have a significant presence in the country,” Mark Barnett, equity analyst at Morningstar, tells LatinFinance. Power generation, industrial use and a growing economy mean a burgeoning demand for natural gas in Mexico going forward, he adds. It is an attractive moment for Sempra to raise equity capital in Mexico, with projects under its belt and more concessions likely available ahead in a liberalizing market, he says. IEnova is raising funds for general corporate purposes, investments and expansion, with about 85% going to the gas business and 15% to electricity. The issuer has about $1.35bn in project needs, including a 25-year contract to build and operate a pair of gas pipelines in the state of Sonora. Citi, Credit Suisse and Deutsche Bank managed the local and international portions, joined by BBVA Bancomer on the domestic tranche. IEnova operates five gas pipelines and a regasification terminal in Mexico, and derives about 60% of its revenues from CFE contracts. The transaction is the l