IC Power has withdrawn its initial public offering due to volatile market conditions.
The Peruvian power company’s CEO Javier Garcia-Burgos said in a statement late Thursday the proposed IPO, which was poised to price this week, was “not in the best interests” of the company and its shareholders at this time.
Orders were shaping from a number of Chilean and Peruvian pension funds along with utility-oriented investors, one equity capital markets banker said.
“It was shaping up to be a solid book,” the source said. “Investors had appetite for the company story and its management was seen as solid, but there was a lot of volatility.”
Despite investor interest in the IPO’s marketing efforts, it fell flat on a day when stocks from rival power companies also slumped, the banker added. LatAm equity indices were also down 12% this week.
“In the second week of marketing, volatility went up just from the global noise from Trump’s comments,” a second ECM banker said.
“The company could have gone for a smaller-sized IPO, but having liquid stock would have been key,” a third source monitoring the trade said. The source also said IC Power could have priced its share offering at $10 apiece.
Chilean utility Colbun’s share price slumped from CLP131.95 ($0.21) at the end of January to CLP122.7 last Thursday night. Similarly, AES Gener in Chile saw its shares drop from CLP233.74 on January 26 to CLP219.3 last Friday.
“The volatility impacted markets and investors were not as willing to pay what was enough for the company,” the second banker added. “So they decided to be disciplined and pull the deal.”
Sources also said IC Power was in no rush to raise their equity capital after the company first filed plans with the Securities Exchange Commission back in September 2015.
IC Power, which is owned by Israel’s Kenon Holdings, sought at least $350m in a New York Stock Exchange IPO. The company was valued at roughly $1.27bn to $1.59bn. Leads had set pricing at $12 to $15 for each of the 25.9m shares.
IC Power has 11 power purchase agreements in Peru, Central America and Israel. The company earned $1.7bn in revenues in the 12 months ending September 2016.
Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs and UBS were joint bookrunners on the IPO. HSBC, Scotia Capital and Credicorp Capital were co-managers. Skadden was legal counsel to IC Power, while Morgan Lewis and White & Case were manager attorneys, according to Dealogic.