Mexican Lender Prices IPO at Low End

Mexico’s Credito Real has priced a MXP2.56bn ($200m) IPO at the bottom of the range, with the new shares trading down 3.1% in their first session. The offer from specialist in payroll, group microbusiness and durable goods loans was to be a test for small and mid-caps’ issuing prospects following the $4bn Santander Mexico IPO. Credito Real priced 116m shares late Tuesday, assuming a 15% greenshoe, at MXP22.00 each, versus a MXP22.00-MXP26.00 range. Primary shares represented 76% of the sale, with the remainder secondary shares sold by investors including Nexxus Capital – the largest pre-IPO holder with 18.3% – and Grupo Kon. The issuer came close to its goal of placing half the shares internationally, with 45.2% sold a 144a/RegS international tranche and the remainder in Mexico. Analysts saw the low end of the price range representing about 2.5x book value, and considered the 2.7x multiple suggested by the high end to be expensive. The level compares to the 3.5x seen by microfinance lender Banco Compartamos. Proceeds are to be used for general corporate purposes and for expansion plans. Deutsche Bank and Barclays managed the international portion, joined by Banorte-Ixe on the domestic tranche. The IPO now brings a pause to what has been the busiest month in recent memory for Mexican equity issuance. Credito Real, Pinfra and Mexichem have all followed in the wake Santander. Decent aftermarket performance – Santander is up 22.2% since its IPO and Mexichem up 7.6% since a follow-on – from the bigger deals has bankers encouraged that others in the pipeline can continue the run as international buyers continue to take a more favorable look at Mexico.