Latin America IPO value declines sharply in first half



Latin America saw a sharp decrease in both value and volume of initial public offerings (IPOs) in the first half of 2019, largely due to continuing economic and political turmoil in the region, compounded by a climate of global economic uncertainty. 



There were only two domestic IPOs totalling $243 million across the region in the first half of this year, a decline of -95 per cent in value and -71 per cent in volume compared to the same period last year, according to research by Baker McKenzie. 



In the same period of 2018, domestic IPO activity reached $4.69 billion in seven IPOs, all of which took place in Brazil and Mexico. 



However, “the hangover of political scandals in Brazil and new left-wing leadership in Mexico has taken its toll in both countries, as Latin America experienced its lowest level of IPO activity since 2014”, the law firm said.



In the first half of this year, Grupo SBF raised over $173 million on São Paulo’s B3 exchange in March, while Inmobiliaria Manquehue raised $69 million on the Santiago Stock Exchange in February.

The one listing out of Latin America was that of Colombia’s $100 million offering from Andina Acquisition on Nasdaq, the first Latin American IPO since the US federal government shutdown ended in January.

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

“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,” he added.