Bloomberg
Mexico City
Credit Suisse Group leapfrogged Citigroup to become Mexico’s biggest stock underwriter this year as companies sold a record $12.3bn of shares amid projections an oil boom will spur economic growth.
The Zurich-based bank, which ranked fourth in 2012, worked on $3.22bn of stock sales by Mexican companies in 2013, garnering $40mn in fees for a 14% market share, according to data compiled by Bloomberg. Banco Santander garnered a 12% share, while Citigroup, last year’s biggest stock underwriter in Mexico, took 8.9%.
Mexican companies ramped up share sales this year as President Enrique Pena Nieto opened the state-controlled oil industry to private investment for the first time since 1938, a move projected to lure $20bn a year in foreign capital. Credit Suisse led real-estate trust Fibra Uno Administracion’s $1.7bn follow-on offering and an $892mn initial public offering by Grupo Sanborns, billionaire Carlos Slim’s restaurant chain.
“With the energy reform and all these other reforms, I think there’s continued appetite to invest in Mexico,” Santiago Gilfond, Credit Suisse’s head of Latin America equity underwriting, said in a telephone interview from New York. “We’ve done a tremendous amount of work with a lot of clients down there. And so from an execution perspective and from a trusted advisory, relationship perspective, we think we have an edge.”
Mexico’s equity sales this year exceeded last year’s record by 36% and were six times higher than the average of the five years before that. The amount compares with $14.1bn raised this year in Brazil, an economy twice Mexico’s size. Of the 19 Mexican equity deals in 2013, 10 gained after the offering date even as the benchmark IPC index of 35 Mexican companies has fallen 2.3% year-to-date as of 10:53 am yesterday in Mexico City.
Credit Suisse, whose Mexican unit is led by 16-year veteran Hector Grisi, won roles on eight equity offerings in 2013, compared with five in 2012. Fees almost doubled from the $22mn collected last year, based on data compiled by Bloomberg.
The Zurich-based firm benefited from its relationships with Fibra Uno and other real-estate investment trusts, known as Fibras, which have expanded since the corporate structure was first introduced in 2011. Credit Suisse worked on the $305mn IPO of San Pedro Garza Garcia, Mexico-based Asesor de Activos Prisma SAPI, a Fibra that invests in hotels. Wenceslao Bunge, Credit Suisse’s Argentine global co-head of real-estate investment banking, assisted on several of the transactions from his base in London. Bunge said in an interview that his Latin America background has probably helped win business.
“Credit Suisse is one of the banks to beat, without a doubt,” Jorge Pigeon, the head of investor relations for Fibra Uno and a former Santander investment banker, said in a telephone interview from Mexico City. “To have a professional specialised in real estate who is also Latin American, who has lived in the region and understands how our market works, is very important.”
Credit Suisse’s real-estate expertise helped it win a role managing Mexico City-based industrial-park operator Corp Inmobiliaria Vesta’s $217mn follow-on offering, Juan Sottil, the chief financial officer of Mexico City-based Vesta, said in a telephone interview.
“The process of an IPO is extremely demanding for a company and its bankers,” Sottil said. “We were very interested in the fact that it was a bank with expertise in real estate.”
Credit Suisse missed out on the year’s biggest deal, Grupo Financiero Banorte’s $2.5bn follow-on offering. The underwriters included Banorte along with Bank of America Corp, Banco Bilbao Vizcaya Argentaria, Grupo BTG Pactual, Citigroup, Goldman Sachs Group, JPMorgan Chase & Co and Morgan Stanley.
Felipe Garcia-Moreno, the head of investment banking and corporate lending in Mexico for No 6-ranked JPMorgan, said the market is growing enough to sustain business for existing competitors and lure new players. JPMorgan led this year’s $1.08bn offering from Grupo Lala SAB, Mexico’s biggest milk company.
“There’s going to be continued competition,” Garcia- Moreno said in a telephone interview from Mexico City. “However, we think that the levels of activity are significantly higher than in the past, and as a result there will be business for all of the main banks.”
Miguel de Maria Campos, the head of Mexico equity capital markets at Santander, said in a telephone interview that 2013 was “very hard fought.” The government’s economic reforms will help fuel continued stock sales next year, he said.
“The pipeline is robust,” he said in a telephone interview.
Press officials for BBVA’s Bancomer unit and Citigroup’s Banamex unit declined to comment, as did Michael DuVally, a spokesman for Goldman Sachs, the New York-based firm that was the biggest underwriter of US stock offerings this year.
Carlos Vara, a former Citigroup investment banker who left to start advisory group Vace Partners in 2009, said the boom in real-estate trusts is bound to slow and crimp issuance overall.
“I don’t think the issuance volume in Mexico can be sustained,” Vara said in an e-mailed response to questions. “The fibras market is becoming saturated.”
Credit Suisse has about 200 people in Mexico City and Monterrey, including investment-banking as well as brokerage and private-banking personnel, said Drew Benson, a New York-based spokesman for the bank. About 15 to 20 people typically work on Mexico equity transactions, including local bankers and industry specialists and equity-market specialists sometimes working outside the country, Benson said.
Credit Suisse’s Gilfond is based in New York and has worked for Credit Suisse for two decades. Pedro Jorge Villarreal, the Mexico City-based co-head of Latin America investment banking, joined in 2000 when Credit Suisse bought Donaldson, Lufkin & Jenrette.
“We have a massive amount of consistency in coverage,” Gilfond said.
The bank advised Infraestructura Energetica Nova, a Mexican pipeline operator, on its $597mn IPO in March. Shares in the company, known as IEnova, have soared 55% since. In June, Credit Suisse led a $949mn sale of CaixaBank’s stake in Slim’s lender, Grupo Financiero Inbursa.
Credit Suisse had “for quite some time followed and studied the evolution of Inbursa,” Marco Antonio Slim, Carlos’s oldest son and the bank’s chairman, said in an e-mailed response to questions. “They have a very good team.”
