MEXICO CITY--Mexican bank Grupo Financiero Banorte SAB (GBOOY,
GFNORTE.MX) raised $2.5 billion Tuesday in a share offering with
which it will fund recent acquisitions and strengthen its capital
ratios.
Banorte priced around 447 million shares, including
overallotments, at 71.50 pesos ($5.66) each, a 1% discount to
Tuesday's closing price on the Mexican stock exchange of
MXN72.21.
David Suarez, Banorte's head of investor relations, said demand
was 3.4 times the amount offered, or over $8.5 billion, with 60%
sold in a global offering and 40% to local investors in Mexico.
Banorte will use a large part of the money to pay for two recent
acquisitions from European firms in need of cash: Spain's Banco
Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC) and Italy's
Assicurazioni Generali SpA (G.MI). The company will also use
proceeds for the purchase of the International Finance
Corporation's minority stake in Banorte's main bank unit, and the
rest will be used to bolster Banorte's core capital, Mr. Suarez
said.
Just two decades ago, Banorte was a small regional bank. But
over the past four years, it has engorged on acquisitions to become
Mexico's third-biggest bank lender, nearly doubling its loan
portfolio to around $32 billion while becoming the country's
biggest pension fund manager. Mr. Suarez said Banorte plans to
consolidate its acquisitions and isn't currently thinking of making
more.
The expansion has positioned Banorte as the biggest local
alternative in a country that represented the bulk of BBVA's profit
last year and more than 10% of Citigroup's (C).
Banorte Chairman Guillermo Ortiz, who led Mexico's central bank
from 1998 to 2009, has in the past criticized the outsized role of
foreign banks in Mexico, where the institutions are extremely
profitable and yet cautious on lending.
In the aftermath of the global financial crisis, Banorte has
proven to be more aggressive on lending growth than Mexico's top
two banks. Last year, Banorte grew its loan portfolio by 16%,
compared with a 6% contraction at BBVA Bancomer and a 13% expansion
at Citi unit Banamex.
The extraordinary market shares of BBVA Bancomer and Banamex,
which together are behind around 40% of total commercial bank
credit, help ensure rich rates for loans, said Ed Kuczma, an
analyst who weighs in on investment decisions at the $350 million
Van Eck Emerging Markets Fund in New York.
"The competition is pretty complacent in terms of making sure
that pricing doesn't become more competitive and drive yields
down," said Mr. Kuczma, describing the Mexican economy as a "cash
cow" for foreign banks.
Private-sector financing as a percentage of gross domestic
product in Mexico is around 26%, according to World Bank and
Mexican government figures, well below international peers and the
50% average for Latin America.
"None of them lend--not the Mexicans and not the foreigners,"
said Dolores Padierna, a high-ranking senator with the leftist
Party of the Democratic Revolution, decrying the tendency of
Mexican banks to invest deposits in government bonds, which yield
juicy returns with modest risk.
The Mexican government is pushing to boost lending and drive
competition among banks, which could nudge rates lower and
eventually crimp the financial sector's profits.
Meanwhile, the scarcity of financial-sector stocks in
Mexico--both BBVA Bancomer and Banamex aren't publicly
traded--contributed to outsized demand for the EUR3.18 billion
($4.15 billion) initial public offering in September of Grupo
Financiero Santander Mexico SAB, a unit of Spain's Banco Santander
SA (SAN, SAN.MC) and Mexico's fourth-biggest lender.
Banorte placed shares in a tougher environment, since the
Mexican economy has shown signs of a slowdown this year and local
stock valuations are at a premium to their developed market peers.
The bank had previously hoped to raise around $3 billion for the
float.
Geoffrey Pazzanese, who helps manage $780 million in assets at
Federated Global Investment Management in New York, says concerns
about economic growth and valuations led him to slash his Mexico
exposure to zero as of June versus an overweight position last
August.
Banorte has snapped up assets as firms based in recession-hit
Europe attempt to raise cash. The bank paid $800 million earlier
this year to cover its half of a purchase, along with Mexico's
Social Security Institute, of BBVA's Mexican pension business. And
in June, Banorte announced plans to take full control of its
Mexican pension and insurance joint ventures with Italian partner
Assicurazioni Generali for $857.5 million.
--Anthony Harrup contributed to this article.
Write to Amy Guthrie at amy.guthrie@wsj.com
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