Near and (not so) dear
In a year in which IPOs in Latin America were non-existent, Vesta Real Estate energised its growth prospects and secured access to the world’s deepest capital market by raising US$445.6m in a NYSE listing.
In doing so, the Mexican industrial property landlord provided US and international investors with a more liquid way to invest in the nearshoring trend by many multinationals to bring their manufacturing footprint and supply chains closer to the US.
June’s US debut, the first by a Mexican company since 2019 and the largest since 2013, saw Vesta sell 14.375m American depository shares at US$31 each. New investors took more than 80% of the offering.
"This was a sizeable transaction," said Marcelo Millen, Citigroup’s head of Latin America equity capital markets. "One of the challenges with local listings by Mexican companies is very shallow liquidity in the secondary market."
Citigroup, Bank of America and Barclays, joint global coordinators on the offering, conducted in-person investor meetings in the US, Canada and Europe for six days ahead of a broader four-day public roadshow.
"Not all [international] investors can travel to Mexico to do their own due diligence," said Vesta CEO Lorenzo Berho.
"This transaction gave the opportunity to a new investor base that understands real estate, understands growth opportunities, but cannot invest in places like Mexico directly."
Ten institutions placed 10%-plus orders, contributing to about US$1.3bn of overall demand from 75 investors.
To overcome any initial concerns about trading liquidity, investors could convert their ADS into local shares at no cost within the first 60 days. Each ADS represents 10 common shares.
Vesta was also able to return in December to raise another US$148.8m from an opportunistic follow-on of 4.25m ADS at the higher price of US$35 each to exhaust the amount of funding previously approved by shareholders.
The bulk of the US$594.4m raised from the two equity offerings (60%–70%) is helping to fund US$829m of spending on new warehouses through 2025. Vesta’s goal is to grow its footprint to 48.5 million square feet from 33.7 million currently. The rest of the money is being used to acquire land for development.
Vesta, which counts Bombardier, Home Depot, Nestle and Nissan Motor among its global tenants and who pay rent in US dollars, put the money to work quickly by completing 2.3 million sq ft of projects in the third quarter and beginning construction on another 2.6 million sq ft.
Vesta's C Corp structure – it is not a REIT and is therefore more growth-oriented – and strengthened corporate governance standards also met the exacting requirements of US investors, which will make it easier to return to the market for capital to fund growth.
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