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Viva Aerobus postpones IPO amid tough markets

Feb 12, 2014

The Mexican low-cost airline held back on its listing, while Bancolombia is hoping for more success with its equity follow-on sale

Mexican airline Viva Aerobus postponed its initial public offering on Tuesday, citing bad markets after struggling to get enthusiasm from investors.

The decision makes it the third company in two weeks to hold off on issuing equity in public markets, following similar calls on an IPO for Office Depot de México and a follow-on for Brazil's Fras-le last week.

"While we received significant interest from potential investors, the continued market volatility is not an optimal condition for an IPO," Juan Carlos Zuazua, VivaAerobus's chief executive said in a statement.

Still, others continued to hope for better conditions. Colombian lender Bancolombia opened books on its follow-on sale of 110m preference shares on Monday, a deal that could raise as much as COP2.55tn ($1.24bn) if it comes at the upper range of guidance.

Brazilian telecom Oi is also hoping to raise capital in the coming months, and is taking a cautious approach. It said this week that its capital raise, a precondition for merging with Portugal Telecom, would be backstopped by the lead managers.

Meanwhile, Viva Aerobus would keep looking at the market for an opportunity to resume the deal, Zuazua added. The low-cost flyer could have raised as much as MXN2.8bn ($210m) if its IPO had been priced at the top of the range.

"Even pricing at the low end of the range would be heroic in this market," said a banker following the deal.

Latin equity markets have suffered in recent weeks, with Mexico's IPC index falling 4.6% since the end of 2013. Investors have pulled over $18.59bn from emerging market equity funds this year, and $1.78bn from LatAm-specific funds. LF



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