Latin American shyness at U.S. capital markets.

Author:De Haro, Jose Luis
Position:MULTILATINAS: NYSE
 
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Supported by stable equity returns, global IPO issuance reached the highest levels since 2010 last year. Annual IPO proceeds increased 48.7 percent to $204.8 billion. North America was the largest contributor to IPO issuance with the United States accounting for 39 percent of global proceeds.That said, IPO issuance in Latin America stagnated as Brazil entered an economic recession and political unrest dampened investor sentiment, according to a report published by Renaissance Capital.

But as Alex Ibrahim, vice-president and regional head for Latin America, Bermuda and Caribbean Regions at Intercontinental Exchange NYSE explained, "there is still plenty of room for Latin American companies to issue equity in U.S. markets since the demand is huge." During last year, the floor of the New York Stock Exchange hosted a total of four issuers from the region. Among them was Grupo Aval, the largest Latin American IPO here in the U.S. ever, raising over $1.26 billion.

"We have two deals already filed with the Securities and Exchange Commission (SEC), one is from Brazil's Azul Airlines, and the other one is a Peruvian company, Intercorp, ready to go to the market once the window of opportunity opens up," he said, while adding that Intercontinental Exchange NYSE, is very focused in Mexico and Colombia "where we see a great potential when it comes to issue equity in the U.S." Pern's Intercorp is willing to raise up to $400 million.

Ibrahim pointed out that U.S. equity exchanges do not trade a lot of Latin American companies so, "there is a lack of product in the market." As an example, Intercontinental Exchange NYSE only has three Colombian and five Peruvian companies listed. "A lot of companies from the region don't see that there is room and liquidity, so we hope companies will start getting excited because the demand is here for Latin America."

It is true that there are opportunities on both ends of the table. With all the economic headwinds the region has been facing lately, valuations of Latin American companies are lower, so there is a good opportunity for foreign investors willing to enter the region. At the same time, investors of companies around the region are willing to pay a nice premium when it comes to raising capital in the...

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