Mexico has not had an initial public providing in 12 months. In truth, the country has considered only six IPOs since 2019, per PwC’s World IPO Behold.
By Carlos Martinez and Dominic Pasteiner
With the Mexican stock market in the doldrums, a number of publicly listed companies are trying to de-listing or be taken non-public. The Mexican stock market changed into down 13.7% final year while the U.S., as measured by the Same old & Uncomfortable’s 500 index, changed into up more tan 16% over the the same time frame.
Mexico flag waving with stack of money coins macro
In the final nine months, paper maker Bio Pappel, Banco Santander Mexico, Sempra Vitality’s native unit Infraestructura Energetica Nova, dairy firm Grupo Lala, and chemical substances and paper distributor Grupo Pochteca ranking announced or launched plans to delist their shares from Mexico’s equity market.
While the explanations for doing so fluctuate – from historical market performance to company restructuring to founders trying to assemble pudgy administration, the delisting bulletins level to an “nearly nonexistent” public equity market, mentioned Martin Werner, co-founding accomplice of funding firm DD3 Capital Companions.
There were only 160 listed companies along side actual estate funding trusts in Mexico in 2019, in comparison with larger than 3,000 in India, as an illustration, per Contemporary York-primarily based entirely PE firm Overall Atlantic.
A expansive field with Mexico’s equity market is its lack of liquidity, Werner effectively-known.
As of 2018, Mexico’s equity market liquidity, measured by trading volume as a share of GDP, changed into 5.1x lower than Brazil’s and 1.9x lower than Chile’s, per a 2019 epic on Latin The United States’s equity market by the Organization for Economic Cooperation and Vogue.
The dearth of retail investors is the main clarification for the low liquidity, mentioned Arturo Saval, chairman of Mexico Metropolis-primarily based entirely PE firm Nexxus Capital, which has been at the abet of among the most country’s most anticipated IPOs, along side Grupo Traxion’s in 2017.
Mexico, with a population of 126 million, had 940,000 brokerage accounts at the cease of 2020, 215% larger than in 2019 but unruffled a much yowl from the roughly 80 million accounts in the U.S.
The country’s miniature retail-equity investor inferior and, which capability its big boost attainable changed into one motive at the abet of SoftBank Group’s $150 million funding in Grupo Bursatil Mexicano’s on-line trading platform GBM+ final month.
With out a orderly retail investor inferior, most public equity shares in Mexico are purchased by institutional investors similar to pension fund managers, or Afores, with long-term funding horizons, main to low trading volume and liquidity, Saval mentioned.
This presents Afores an outsized affect on the valuation of non-public companies trying to head public, Saval mentioned. “In Mexico, it is these institutional investors that location IPO valuations, whereas in the U.S. it is a ways the companies that location the valuations.”
The initiate in 2018 of Mexico’s 2nd bourse - Bolsa Institucional de Valores - “energized” the country’s equity market, though there may perhaps be unruffled a good deal of ground to veil, mentioned Saval, who's an impartial board member at BIVA.
The country’s most modern IPO took build of abode on BIVA. Cox Vitality The United States, a subsidiary of Spain’s renewable energy firm Cox Vitality, $33.7 million final July. It changed into Mexico’s first public share sale in nearly three years.
With out a interesting public market, many non-public Mexican companies are turning to mergers with special-reason acquisition companies as a technique to head public in the U.S., Werner mentioned.
About 18 Latin American clean-check companies were listed in the U.S. in the final three years, Randy Bullard, a Latin The United States-primarily based entirely accomplice at regulations firm Morrison & Foerster, mentioned earlier this month for the length of a webinar.
Based entirely in Bogota, Colombia, Carlos Martinez is Mergermarket's deputy Latin The United States editor and may perhaps maybe well moreover be reached at carlos.martinez@acuris.com. Based entirely in Mexico Metropolis, Dominic Pasteiner is Mergermarket's Mexico correspondent. He's also reached at dominic.pasteiner@acuris.com.
