Category: Equity

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

Infraestructura Energetica Nova (IEnova) is heard with books well oversubscribed ahead of today’s scheduled IPO targeting at least MXP6.54bn ($528m). Investors have demonstrated interest in Mexican deals this year, though a tendency towards pricing at the bottom of the range suggests a disagreement on valuations that has characterized the IPO market in LatAm in the past few years. With IEnova, the Mexican unit of US-based Sempra Energy, buyers see the upside of energy reform initiatives targeted by the new administration of President Enrique Pena Nieto. This is weighed against the specifics of IEnova, notably a that much of the revenue depends on its natural gas business, including the Costa Azul LNG terminal, at a time when the need for importing gas in North America is dropping. “The reforms are a very positive theme in Mexico right now, though the natural gas dynamics are questionable,” says one investor looking at the deal, to be the first IPO in Mexico’s energy sector. Gas accounted for $478m of IEnova’s $608m 2012 revenue, after accounting for $551m in 2011, according to company documents. IEnova plans to sell 218m primary shares at MXP30.00-MXP34.00, according to a prospectus, indicating a MXP6.98bn deal at the midpoint. The total assumes a 15% greenshoe. The issuer is raising funds for general corporate purposes, investments and expansion. IEnova 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 are managing 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 last Mexican equity sale in the immediate pipeline, though a stream of Brazilian deals is set to hit the market in April.

Prudential Real Estate Investors has priced a MXP9.52bn ($765m) IPO for the Terrafina Mexican real estate trust, coming at the bottom of the range. On offer were 340m primary shares pricing at MXP28.00 each, according to people familiar with the sale, versus a MXP28.00-MXP32.00 range. The share total assumes the exercise of a 15% greenshoe option. Though investors continue to express strong interest in the Fibra asset class, the deal’s pricing compares to a Fibra Uno follow-on coming at the top of its range and a Fibra Inn IPO at the midpoint, both earlier this year. The bottom of the range level is in line with the Sanborns and Cultiba IPO’s this year, suggesting investors’ enthusiasm for Mexico but perhaps with some disagreement on valuations. The Terrafina trust will initially contain 132 industrial properties and 14 properties in development throughout Mexico, coming from Prudential’s PLA Industrial I and PLA Industrial II funds. It claims to have the third-largest industrial real estate portfolio in Mexico, and counts La-Z-Boy, Chedraui and Mattel among its tenants. Proceeds from the sale provide funds to repay debt and for working capital. Going forward, Terrafina plans to target acquisitions in the $750m-$1.25bn range. Citi, Goldman Sachs and HSBC managed. The second Fibra IPO of the year brings the total number of Fibras to five, with bankers expecting at least three more Fibra IPOs during 2013. Mexican new ECM issuance continues Thursday, with the scheduled IPO of Sempra Energy’s IEnova.

Prudential Real Estate Investors is scheduled to price today the IPO of its Mexican real estate trust, known as Terrafina. The deal is expected to raise more than MXP10.2bn ($820m), selling 340m primary shares at MXP28.00-MXP32.00 each, according to regulatory documents. The total includes an overallotment option. The trust will initially contain 132 industrial properties throughout Mexico and 14 properties in development, coming from Prudential’s PLA Industrial I and PLA Industrial II funds. Proceeds would provide funds to repay debt and for working capital. Citi, Goldman Sachs and HSBC are managing. The IPO of IEnova (Sempra Mexico) is scheduled for Thursday.

Mexico’s Fibra Inn has priced a MXP3.81 ($307m) IPO, landing at the midpoint of the range. The deal drew at least 2x demand to become the second hotel-focused and fourth overall Fibra Mexican real estate income trust. Fibra Inn sold 127m primary and 79m secondary shares at MXP18.50 each, versus a MXP17.25-MXP19.75 range, according to sources following the deal. The total assumes the exercise of a 15% greenshoe. The issuer had been expected to sell about 50% of the sale internationally, according to offering documents. The secondary portion included shares sold by Indigo Capital, which is to keep a small holding, and Citigroup Venture Capital International, which exits completely. “This is a specific play that is distinct to the other Fibras, and the sector offers an interesting potential given the macroeconomic development of the country,” says a Mexican equity analyst looking at the sector. He notes that Fibra Inn’s focus on international hotel chain properties is distinct from the Concentradora Fibra Hotelera, which raised MXP4.14bn in an IPO last year and is focused on domestic brands. As with Fibra Hotelera, the properties offer a play on the steady growth expected for business travel between Mexico’s cities, rather than the more cyclical tourism industry. The deal should result in a 77% public float. Proceeds will be used to purchase assets to add to the trust’s portfolio, which initially includes eight Holiday Inn and Hampton Inn hotels in seven cities throughout Mexico, and options to buy six more. Actinver, Credit Suisse and Santander managed the sale. It is the second Fibra deal of 2013, and bankers expect 5-6 total before the end of the year. Prudential is up next, with the MXP10bn Terrafina industrial-focused trust expected to price next week.