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Jul 01, 2019

IPOs see slow start to year in Latin America

Markets held back by ongoing political and economic instability in several member countries

Latin American markets were slow in the first half of the year, due to ongoing political and economic instability in a number of member countries, according to data compiled by global law firm Baker McKenzie

Capital-raising fell by 95 percent to $243 mn during the first six months of 2019, with just two IPOs, compared with seven during the same period last year.  

Clothing company Grupo SBF raised more than $173 mn on the B3 exchange in São Paulo, Brazil and real estate development company Inmobiliaria Manquehue raised $69 mn on the Santiago Stock Exchange in Chile.

The hangover of political scandals in Brazil and new left-wing leadership in Mexico has taken its toll in both countries, as Latin America experiences its lowest level of activity since 2014.

There was one listing out of Latin America, with Colombia’s $100 mn offering from Andina Acquisition on Nasdaq. The IPO was the first in the market since the US federal government shutdown, as the company sought to tap the international investor pool. 

Pablo Berckholtz, Baker McKenzie’s Latin America head of capital markets, says: ‘While activity is usually driven by Mexico, Brazil and Argentina, political issues and scandals have caused great tumult in these areas, with Argentina’s economy continuing to contract.

‘We are, however, beginning to see threads of progress from other areas – Chile, for example, where the government is making concerted efforts to drive its economic development, despite its own political instability.’

Looking at overall capital-raising, US exchanges stormed ahead, buoyed by a strong domestic performance, with the NYSE seeing the most capital raised, totaling $20 bn, thanks in part to Uber’s $8.1 bn listing.  

Nasdaq followed with $15.2 bn and Hong Kong came in third with $7.6 bn across 60 listings. Shanghai and Shenzhen pulled in $3.6 bn and $3.1 bn, respectively.

The NYSE proved to be the listing venue of choice for high-value IPOs, sitting fourth with 32 listings while topping the value tables.

Japan made an unusual appearance in the top three with 37 listings, all domestic, as issuers enjoyed economic stability.