Political Risk Latin America Blog @PolRiskLatam

Latin America exchanges: IPO fever

Posted in News and Articles, Political Risk by politicalrisklatam on July 1, 2011

by The Economist Intelligence Unit, June 27th, 2011.

The region’s IPO market is showing fast growth, propelled by favourable economic conditions, family succession issues and private equity, among other enabling factors.

Initial public offering (IPO) activity in Brazil has rebounded strongly in the past year, and although Brazil is the leader in equity market transactions in the region, Chile, Colombia and Mexico are also displaying signs of strong activity. Integration with the world economy, rapid growth, third-generation family succession problems and private equity are all enabling factors for an increased number of listings in Latin America. Foreign investors’ demand is strong and retail investors’ presence is becoming more important. Exchanges throughout the region are making efforts to increase their attractiveness to companies, with important developments such as the integration of the Chilean, Colombian and Peruvian exchanges.

Latin America’s favourable economic outlook is a key factor in the positive prospects of its IPO market. Rebounding from the global economic crisis of 2008, the region posted high growth rates in 2010, with Argentina, Brazil and Peru growing at over 7%, and Chile, Colombia and Mexico at rates of between 4% and 5%. Economic prospects for 2011 and 2012 remain solid, with growth rates mostly in the 4-5% range, and companies will increasingly require debt and capital to finance expansion plans.

The region’s healthy performance has been the result of the extensive reforms adopted over the past two decades by most Latin American countries, which have strengthened their fiscal positions and their public debt structures. The process has been enabled by the fact that independent and more credible central banks have improved macroeconomic and regulatory policies. (continue reading… )



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