Volatility hit Mexico's equity markets this week as a follow-on equity sale was postponed and another cut in size following a drop in share prices amid the renewed turmoil.
Construction firm Empresas ICA shelved a planned secondary offering of Grupo Aeroportuario del Centro Norte (OMA) shares Tuesday, citing volatile markets. OMA shares had fallen close to 20% since ICA filed a shelf for the sale mid-May.
Meanwhile, Corporacion Inmobiliaria Vesta's follow-on equity sale raised 2.49 billion pesos ($189 million) Tuesday, less than planned after one secondary seller opted out. The real estate investment arm of German savings bank Deka opted to hold on to its stake given the low share price. Vesta sold the planned amount of primary shares and DEG, a private sector financing arm of German development bank KfW also sold a stake in the firm.
Although the company had been looking for a better price, investors were interested in participating Tuesday – and it was uncertain when markets might offer another issuance window, Lorenzo Berho Corona, Vesta's CEO, said.
"We priced at a 5% discount to the share price a day before, which gives room for new investors to invest in the company, it give upside to some investors," he said. Vesta's shares rallied nearly 5% Wednesday, closing at MXP24.85.
The slashing and postponement respectively of Vesta's and OMA's deals followed a week in which LatAm equity funds lost $493 million compared to $3.48 billion in outflows from emerging markets equity funds. The MSCI Lat Am share price index Wednesday was down 20.245% from a year earlier.
The markets were not all sour, however. Spanish lender CaixaBank – on the hunt for tier one capital – raised 12.5 billion pesos ($947m) Tuesday from its sale of shares in Grupo Financiero Inbursa. The deal came at a 1.21% discount to Tuesday's closing price, and matched the price at which Caixa sold a 3.7% stake in the firm to Carlos Slim's Inmobiliaria Carso earlier this month.
Although the Mexican and Brazilian stock exchanges closed up on the day Wednesday, the next round of fund flow data, due Friday, will be closely scrutinized by market participants for indications as to whether further transactions can get done. The dollar equity markets are likely to remain quiet until after the summer. LF