Grupo Lala SAB (LALA.MX), Mexico’s largest dairy company by sales, got off to a positive start Wednesday as its shares rose after pricing at the top of the range in an initial public offering.
Lala shares were recently up 6.3% at 29.22 pesos ($2.27) on the Mexican stock exchange, after pricing at MXN27.50 Tuesday in its IPO.
Mexico’s Vector brokerage said the valuation was still attractive at the initial price, with room to rise further.
«In principle, the outlook for 2014 is relatively positive, in a sector little affected by structural reforms in Mexico and with interesting inorganic growth potential,» Vector said in a report, recommending the shares for long-term portfolios with low risk tolerance and a preference for recurring dividends.
The Lala offering raised $940 million, or around $1.08 billion including overallotments. BBVA Bancomer, which worked on coordinating the deal, said demand was 9.8 times the amount offered, with around half placed in Mexico and half internationally.
Lala is the largest dairy producer in Mexico, operating 17 plants and 161 distribution centers. The company has tripled its annual sales in the past decade to more than $3 billion in 2012, on which it generated operating cash flow of $358 million and net profit of $175 million.
The company, based in Torreon, Mexico, plans to use the money to pay down debt, for mergers and acquisitions, and for investment in increasing productivity.
Lala claimed a 53% share of Mexican milk sales in 2012 and was the largest supplier of cream and prepackaged cheese, while occupying the No. 2 spot in yogurt sales, according to a company presentation.
Source: WSJ
