As one of the firms offering a broad contingent of services
across several transaction types, Ritch Mueller has had a
standout performance over the past year – a fact that
puts it in a strong position to capitalize on
Mexico’s improving economic prospects.
Mexico’s capital markets perked up last year
once it was clear that there would be a change in government.
Coupled with brighter economic forecasts and renewed investor
interest, deal volume has risen across the board.
Ritch Mueller and other law firms are busy preparing for a
2013 bringing more of the usual capital markets and M&A
transactions, as well as an increasing workload in growing
areas such as infrastructure and real estate.
Ritch Mueller was local counsel to Grupo Financiero
Santander as it brought the most recognizable deal in this
post-election era, raising $4.1 billion-equivalent in an IPO on
the Mexican and New York stock exchanges.
"The equity market has been stronger than usual," says
Carlos Obregón, managing partner at Ritch Mueller,
explaining that there are five or six more equity deals on the
horizon for the first half of 2013.
Ritch Mueller was active in several cross-border bond deals
involving Mexican issuers. The firm represented the lenders in
Cemex’s $7.2 billion debt restructuring, one of
the standout liability management transactions of the year.
Thriving, well-capitalized sectors such as financial
institutions and infrastructure are growing at a healthy clip,
Obregón says. Local debt markets continue to be robust,
with strong appetite for Mexican names and interest in both
high-yield and investment-grade issuers.
The firm represented Crédit Agricole as
administrative agent and the lenders in a $1.25 billion
revolving syndicated financing for Pemex. The firm expects to
see the loan market pick up in the year ahead as borrowers seek
to finance projects, says partner Pablo Perezalonso.
The new government is prioritizing infrastructure projects,
and the firm expects to see more interest from US banks in the
loan market as their European counterparts focus on issues at
home, says Perezalonso. Mexican banks are well capitalized and
looking to lend more, encouraged by the government.
Local banks are joining subsidiaries of Spanish banks in
focusing on infrastructure, Obregón says. Road projects
and pipeline financings are of particular interest, with
multilaterals also playing a significant role, especially for
renewable energy projects.
"You’re going to see a couple of solar deals in
Mexico in 2013 which are going to be interesting,"
Obregón says. He also expects to see refinancings as
competition among lenders makes rates better.
M&A was a big part of the firm’s business
in 2012, with Ritch Mueller representing Grupo
Modelo’s principal shareholders in the $20.1
billion sale of 50% of Grupo Modelo to Anheuser-Busch Inbev and
Coca-Cola Femsa’s merger with Grupo Fomento
Queratano for an undisclosed amount.
M&A is likely to be one of the firm’s
primary areas of opportunity in 2013, Obregón says. He
sees the markets being active as private equity firms raise
"significant capital" in new funds.
"Putting aside larger strategic transactions,
you’re going to see a lot of activity between $25
million-$60 million dollars. That’s going to be a
very active market for 2013," Obregón says. The
frequency of larger deals will be harder to predict.
Spanish developers with positions in wind farm and other
power projects in Mexico will likely continue liquidating them,
but Obregón says that’s not the only sector
that will see sales. "There are PE firms that focus on food and
beverage, firms that focus on retail – I think
you’re going to see activity across all sectors,"
Energy and infrastructure – which the incoming
government has indicated it will look to reform Pemex, the oil
company, and CFE, the electricity utility – will
become a bigger part of the firm’s work, along
with real estate, as funds seek to raise money in Mexico either
via Fibra funds or private placement.
"Real estate is going to be more active than in 2012 and
2011 with new projects instead of only existing portfolio
transactions," Obregón says.
Firms now have to turn their attention to getting ready for
the activity, and for the uptick in work ahead, he says. "The
biggest challenge is being able to hire competent associates to
be able to respond to the greater and more sophisticated
workload," Obregón says. LF