Investors growing confident about Mexico's Fibra-E
Despite the stop-start momentum of the Mexican equity instrument, market sources believe at least five or six new offerings will materialize in the short term
Mexico's attempts at mirroring the US' MLP structure, known
locally as the Fibra-E, has gotten off to a stuttering start.
But investors and potential issuers are confident the equity
instrument can kick-off in the coming years.
To date, only toll road concessionaire Pinfra has
issued a Fibra-E and followed this up with another
share issue. Other names, however, such as
Invex Controladora and CFE have talked up potential
Fibra-E IPOs, but nothing has yet materialized.
Pemex, for example, was at one point considered the
frontrunner for a Fibra-E, with many market sources predicting
the state-owned oil company to be the first to roll-out the
young equity instrument.
Pinfra's success, however, has raised potential for other
prospective toll road operators. Concessionaires with pathways
towards the New International Airport of Mexico City Aiport,
for example, could hit the equity capital markets for
Aniceto Huertas, director of fundamental risk at Afore
Citibanamex expects this potential pipeline to materialize in
the next few years, however, because 75% of assets within a
Fibra-E must have been operational for at least 12
Imminently, some five or six transactions may hit screens in
the immediate-term. Carlos Aiza, a senior partner at law firm
Creel expects at least two to present themselves this year.
At present, eligible sectors that can tap into the Fibra-E
pot comprise the midstream O&G space, power sector, road
and transportation and telecoms. Aiza added, however, that this
could be expanded to healthcare and education.
For Aiza, the rationale behind growth in the Fibra-E lies in
its tax-driven incentives. Compared to investing in a public
company, all Fibra-E investors save on the 10% withholding tax
from all dividend disbursements.
For the country's largest investor, the afores, these
pension funds have a tax-exempt status and avoid the 30%
corporate tax involved with other investments.
Afores, however, can only invest 20% of their portfolio in
non-public instruments, so companies looking to spinoff assets,
should be encouraged to IPO and thus avoid alienating Mexico's
largest investor base.
While afores remain crucial to the success of Fibra-Es, Aiza
said pricing points could fall at the hand of Mexico's lauded
"When you have an investor group that has a tax exempt
status and everyone else evidently does not, afores will be
dictating prices on a tax exempt basis, Aiza added. "This price
may not work for everyone else... It will be interesting to see
how this works out."