Mexican equity market lights up

Three successful initial public offerings in the Mexican stock exchange over the past month have encouraged other issuers to move ahead with plans to sell new shares, LatinFinance has heard.

Nemak aims to raise around MXN11.56bn ($751m), excluding overallotment options, through an IPO on June 30 and Elementia will likely follow in July.

Meanwhile, Grupo Mexico is planning an IPO for its rail unit Ferromex later this year and Grupo Alfa is expected to execute an IPO for its subsidiary Sigma in the third quarter, LatinFinance has heard.

A scarcity of deals in recent months, the good growth prospects of the prospective issuers and confidence in the Mexican economy are expected to underpin demand for the transactions.

Four equity sources in the US and Mexico said the strong demand for recent stock sales by Gicsa, Unifin and Fibra HD, and a rally in the local bolsa suggest that the market is ripe for more equity deals.

The Mexican stock exchange closed at 45,454 on Tuesday, up from 42,115 on January 2. Unifin’s shares have rallied 14% since their debut, to close at MXN31.92 on Tuesday.

On the other hand, Gicsa’s shares closed at MXN16.28 on Tuesday down from the MXN17 at which they were priced in early June. The fall could be due to low demand from international investors because of fatigue toward real estate issuances, LatinFinance heard. LF