Cultiba Re-IPOs at Low End

Mexico’s Cultiba has priced a MXP3.94bn ($310m) equity follow-on that serves essentially as a new IPO, landing at the bottom of its price range. The Pepsi bottler formerly known as Embotelladoras Unidas offered 112.7m shares, assuming a 14.7m share greenshoe, at MXP35.00 each, according to sources familiar with the transaction, versus a MXP35.00-MXP40.00 range. The total includes 23.8m secondary shares to be sold by a group of existing shareholders. Books were heard covered, and some 30%-40% of the sale was expected to go to international buyers Wednesday night. The beverage sector is considered one of Mexico’s most solid consumer stories, though buyers may have found Cultiba’s range a bit pricey. “The multiple [suggested by the midpoint of the range] is a bit more expensive than the industry average,” says a Mexico-based beverage analyst, estimating 17.5x financial value/Ebitda, compared to larger peers Coca-Cola Femsa (17.0x) and Arca Continental (17.1x). The shares sold represent 15.6% of the company, assuming the greenshoe is exercised. Cultiba is raising funds to repay bank loans and also targets additional capital for investments. The bottler has a $125m loan due 2022 with Rabobank, costing it Libor+225bp, and an MXP1.61bn ($126m) 2022 loan with Banorte at TIIE+160bp. Bank of America Merrill Lynch, Banorte-Ixe, BBVA Bancomer, Credit Suisse, Inbursa and JPMorgan managed the transaction. Mexican new issuance is scheduled to resume next week, with the highly anticipated $900m-$1.0bn IPO of Caros Slim’s Grupo Sanborns.