Demand Drives Banorte Upsizing

Investor appetite of 3.5x the shares on offer led to Banorte upsizing its equity follow-on to raise MXP31.98bn ($2.55bn), and continued in the secondary market Wednesday. International buyers accounted for 63% of the sale, according to the bank, versus a 50%-50% split foreseen earlier in the process. The bank upsized the deal from 402m to 477m primary shares, assuming a 15% greenshoe is exercised, stetting a MXP71.50 per share price Tuesday night that represented a 0.1% discount from the previous closing price. The increase in shares put the transaction closer to the initial $3bn target. That goal was reduced as Banorte’s share price fell 11.5% since the deal’s June 12 official announcement. The shares were up more than 10% in Wednesday’s session, however, closing at MXP79.73. The demand for the deal encourages ECM issuers that deals can get done even amid periods of volatility. “The Banorte deal shows a resilience in the market,” says a senior ECM banker away from the deal, noting it will help others in the pipeline. Proceeds are marked to help fund the $857.5m purchase of minority stakes in Seguros Banorte Generali and Pensiones Banorte Generali from Italy’s Assicurazioni Generali, repay a loan and buy out the IFC’s remaining shareholding. The shares in the follow-on represent 14.75% of the bank post-sale. Bank of America Merrill Lynch and Morgan Stanley were global coordinators on the deal and Banorte-Ixe the local coordinator. Banamex, BBVA Bancomer, BNP Paribas, BTG Pactual, Goldman Sachs, Itau, JPMorgan, Mistubishi-UFJ and Nomura were joint bookrunners. The deal was Mexico’s largest equity sale since Santander Mexico’s $4.1bn IPO in September 2012, and the largest all-primary follow-on in the country’s history and the second-largest behind a $2.8bn offering from Telmex in 2000, according to Dealogic data. Next up in Mexico’s ECM is the IPO for Fibra Shop. The shopping center-focused real estate fund is targeting MXP5.77bn at its midpoint and scheduled to price