International Buyers Drive Volaris IPO

Nearly 79% of Volaris’ $398m IPO is being sold to international investors in the form of ADS, according to regulatory documents, slightly more than the 75% anticipated. The sale priced Tuesday night ahead of Wednesday’s FOMC commentary and came at the bottom of a $12-$14 per ADS range. Demand reached about 3x by the time books closed, according to people familiar with the transaction. Participation included about 56% long-only investors, with LatAm-dedicated and global airline investors playing an important role in the international portion. Afores were the largest investor type in the Mexican portion, followed by institutions and retail. Overall, about 70% of the buyers came from the US, 17% from Mexico, 10% from Europe, and the remainder from other regions. The deal represents 173.2m primary and 115.4m secondary shares, not including a 15% greenshoe, and priced at MXP15.51 ($1.20) per share, or $12.00 per ADS. Each ADS represents 10 shares. Volaris plans to use proceeds for general corporate purposes and to repay loan debt. Deutsche Bank, Morgan Stanley, UBS, Evercore and Santander managed the transaction, joined by Barclays and Cowen on the international portion. Volaris is the first Mexican company to IPO on the NYSE in 2013. The shares were up Wednesday, closing at MXP17.88. The completion of the transaction, plus the good news from the FOMC, could encourage others in the pipeline, which included follow-ons from Avianca-Taca and Latam. The picture remains unclear for IPOs, with Brazil’s Ouro Verde is heard adding itself to the list of those choosing wait.