Alpek to Test Mexican IPO Appetite

Alpek has launched an IPO targeting as much as MXP11.96bn ($910m), giving investors a look at Mexico’s first large IPO since 2010, as the overall outlook for the country improves. At first glance, analysts see the implied valuation as in line with or slightly expensive to the industry average, depending on where the 379.8m primary shares price within the MXP27.50-MXP31.50 range. Such a deal would raise MXP10.44bn-MXP11.96bn for the Grupo Alfa petrochemicals producer. The share total assumes the exercise of an overallotment option. Pricing is scheduled for April 25. “At that range it could come at the high end of the sector,” says a Mexico City-based equity analyst, spotting the valuation at 6.9x-7.8x 2012 earnings, compared to Mexichem’s 7.6x and a 7.3x sector average. “It is in line with other companies in the sector,” says an analyst at another shop, pointing to 7.0x-7.8x, versus a global average of 7.5x. “There should be strong appetite for this transaction,” says an ECM banker away from the deal, noting he expects a similar demand to Fibra Uno’s well received follow-on last month. The polyethylene and polypropylene producer, many of whose products are used in the food and beverage industry, is raising funds to repay debt and for general corporate purposes. Credit Suisse, Citi, HSBC and Morgan Stanley are managing the sale, in which 75% of the shares are marked for international distribution. It would be the first Mexican IPO since BanRegio raised MXP2.09bn in July 2011, and the first $500m-plus offer since OHL Mexico in October 2010. The deal will provide a further test for new issuance in Mexico, which both bankers and investors have become more optimistic about, considering recent macroeconomic and political developments as well as an outperformance of the Bolsa. “Mexico needs to have more issuance, and it should be quite easily digested, because investors are hungry for diversification in Mexico. Also, Mexico is full of sectors that investors want get acces