CCD Rejects Fuel Mexico IPO Flow

With the Mexican Certificados de Capital de Desarrollo (CCD) pipeline swelling and private equity moving to the front of the line, smaller firms may switch to placing the first Mexican IPOs in almost 2 years. Grower Proteak and developer Tres Marias, among smaller names filing last year for CCDs, have both filed to float on the Bolsa. Regulatory changes approved last year allow Afores to invest in off-index equity, opening the door to funding for small and mid cap issuers. Tres Marias, which is developing a “city within a city” mixed-use project in Michoacan state, has filed for a transaction of up to MXP1bn. “Last year the CCD seemed like the optimal way to access the Afore funds,” says a company finance official. “But with the way that market has developed and with the changes to the Afores’ investment rules, we’ve decided that the best means is an IPO,” he adds. The developer had done marketing for a CCD last year, and expects to resume this month pitching an IPO. Ixe is managing the transaction. Tres Marias saw pre-tax earnings of MXP55.49m in 2009, according to regulatory documents. Meanwhile, Proteak, a grower of teak wood for export, is launching this week an IPO roadshow, according to a banker on the deal. The company is “ready to go public,” the banker says, and has opted to sell stock instead of a CCD, after regulatory changes allow sales to Afores. Proteak, whose earnings depend on trees that take 9-12 years to develop, had a 2009 pretax loss of MXP36.77m, according to its filing. Bulltick is managing the sale, with proceeds for acquisitions and organic growth. The exact size is not disclosed for either deal, though they are each expected to raise under $100m equivalent. Proteak is in the same business as AGSA, the grower that in 2008 first used the structure that would later evolve into CCDs. However, since regulators standardized the structure in 2009, it has proven more suited to PE and infrastructure fund managers with track records than small busines