According to the people with knowledge on the matter, Mexico’s biggest ever equity offering since more than three years was Jose Cuervo selling shares of about $790 Million.
Cuervo is the world’s biggest tequila maker and their offered shares went for 34 pesos per share, which was the higher end of their projected range, according to a source. If we exclude over-allotment option, Jose Cuervo’s offering of $791 million has made it Mexico’s largest ever IPO in terms of dollars after Grupo Lala raised its IPO at $938 Million in the month of October in the year 2013.
The source also mentioned that investors had sent Jose Cuervo, the tequila maker, orders of about eight times more than the size of their offering on Wednesday. This was despite the limbo that the trade relations of Mexico with the US are! The success of Jose Cuervo’s IPO is believed to bring in more issuers that could buck the slump that is in Mexico where the IPOs have been in dormancy lately.
There are companies like Fibra Resort that froze their IPO last year, but are looking for a window to release their offering now. Another source commented on Cementos de Chihuahua, which is supposedly going to release an equity offering in Mexico this Thursday. The offering is hoped to be about $392.2 million (8 billion pesos), which is middle of their price range.
The Chief Executive Officer of Jose Cuervo, Juan Domingo Beckmann had been signaling of an IPO/stock listing to be under consideration since the year 2006. Therefore, the IPO doesn’t come as a surprise to us. They had filed to sell their share in September, but they put their offering on the fritz after President Donald Trump surprisingly won the US presidential election, which upended the Latin America financial markets and raised many concerns that Jose Cuervo’s shares were going public at a very inopportune time.
The investor roadshow presentation answered that the reason behind their IPO was an opportunity to transform their spirits into a global brand by using the proceeds from this offering to buy other premium and scalable brands, which would help grow their business.
The success of the offering depicts how popular Jose Cuervo is rather than telling us about Mexican investor’s appetite for offerings of new shares in Mexico. According to the distiller’s preliminary prospectus, more than 60 percent of revenue was collected from Canada and US in the year 2015 even when their costs were said to be in pesos.
Julie Chariell, a Bloomberg Intelligence analyst, believes that the peso decline due to US presidential election might bring a compelling price in the US market for the company. This would definitely help the company achieve the international brand status it deserves.