Latin equities bounce back after grim day for new deals
February 6, 2014
Geopark moved forward with a slimmed-down IPO on Thursday as stock indices in Brazil, Chile and Mexico traded up
Chilean oil and gas firm Geopark was set to finalize its New York listing on Thursday, as stock indices recovered after a troubled start to the week.
Chile’s IPSA index rose 1.12% on Thursday, while the Ibovespa was up 2.39% and Mexico’s IPC increased by 1.02%.
Geopark cut the size of its deal, lowered the target price, and took support from existing owners, after struggling to sell 20m shares at $8 to $10 apiece as planned. Yet the fact the deal was advancing was something of a victory after share markets fell earlier this week.
Volatility and dire market conditions forced Grupo Gigante to postpone its IPO of Office Depot de Mexico on Wednesday, it said. The Mexican firm had offered 253m shares at MXN16 to MXN18 apiece, meaning it could have raised up to MXN4.5bn ($333m).
Brazilian auto part maker Fras-le also halted its share sale. It had planned a follow-on, but stepped back amid the unfavorable conditions. Under Brazil’s capital markets rules, the firm could pick up the deal in the next 60 days without refiling documentation, LatinFinance understands.
Latin equity markets have had a bad start to the year. They were badly hit last month by a sweep of worrying news for emerging market investors, including Argentina’s surprise devaluation of the peso.
At $6.3bn, outflows from emerging market equity funds last week were their worst since August 2011. LatAm-specific funds were particularly hit. “People are favoring developed markets,” said an ECM banker on Wednesday. “They will sustain the taper better… in the US, everything is ripping.” LF