Bloomberg News

Bolsa’s Tellez ‘Skeptical’ of Return of Mexico IPOs in ‘12

May 31, 2012

Bolsa Mexicana de Valores SAB’s Chief Executive Officer Luis Tellez said he doubts there will be more initial public offerings this year as Europe’s debt crisis saps demand for emerging-market assets.

Corp. Inmobiliaria Vesta SAB, the latest Mexican company that filed to list shares, “basically decided not to go out because of the markets,” Tellez said in an interview at a pension fund conference in Cancun. Vesta hired Credit Suisse Group AG and Banco Santander SA (SAN) to arrange the deal.

“I’m a little bit skeptical that something will happen in the rest of the year,” Tellez said. “I’ve been very skeptical about the way Europe is going.”

While Mexico has a pipeline of about 10 companies considering selling shares, the market has been dormant since petrochemicals producer Alpek SAB (ALPEKA) went public last month, snapping a nine-month lull, Tellez said. Alpek priced at the bottom of a range provided in the prospectus.

Alpek’s IPO was the first since July, when lender Banregio Grupo Financiero SAB raised 1.8 billion pesos. OHL Mexico SAB, the construction company that did Mexico’s biggest IPO when it sold shares in 2010, has lost 37 percent since the listing.

Still, Tellez said he’s optimistic that Mexico’s next president may initiate changes needed to bring state-owned oil company Petroleos Mexicanos to the stock market, a potential watershed moment for the exchange and an oil industry that has been under government control since it was nationalized in 1938.

‘Realistic Probability’

“There’s a realistic probability of it happening” during the next government, Tellez said. “If the president does it from the very beginning, it would clearly create a very interesting climate in terms of saying, ‘Things are changing for Mexico.’”

Enrique Pena Nieto, the frontrunner in polls before the July 1 vote, says he’ll seek to open the industry to private investment.

Tellez also said he expects the exchange’s derivatives business to pick up, with revenue increasing “at least” 50 percent. Pending regulatory changes that will require over-the- counter derivatives to pass through a clearing house will bolster revenue, Tellez said.

Mexico’s National Banking and Securities Commission is working on the new rules to comply with Group of 20 guidelines and expects to finish them by year-end, spokesman Carlos Lopez- Moctezuma said in a May 22 e-mailed response to questions. The changes don’t require congressional approval, Lopez-Moctezuma said.

‘Very Competitive’

While Bolsa Mexicana is the country’s only exchange, it would have to compete with other clearing houses abroad when transactions involve a non-Mexican counterparty, according to Tellez.

“It would increase our business,” Tellez said. “I’m very optimistic that we will be very competitive. We will be attracting some of the business which is done with one leg in Mexico and one leg outside Mexico.”

About 20 percent to 25 percent of the country’s derivatives transactions are between two Mexican parties while the rest involve a foreign counterparty, Tellez said.

Bolsa Mexicana plans to announce a new head of strategic planning next week to replace Javier Artigas, Tellez said. Artigas left the exchange this month to become country head in Mexico for Sao Paulo-based Banco BTG Pactual SA.

The exchange has interviewed five candidates to replace him, according to Tellez.

To contact the reporter on this story: Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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