The rise in activity in Latin American equity markets outside Brazil is presenting international banks with a strategic challenge to monetize what could be large international capital market revenues.
Local banks still play an important role in bringing these deals to market, as domestic investors dominate in most Latin American countries, but international bankers expect that companies will ultimately turn to global investors and are planning for that.
Access
Capturing market share from local players in Argentina, Chile, Colombia and Mexico is seen as a good opportunity, given that local banks have little or no access to international investors. This competitive advantage over local banks is in marked contrast to the situation in Brazil, where local banks such as Itaú BBA and BTG Pactual can compete with the international banks in terms of global distribution.
So far this year, two Colombian companies have accessed their local equity market: airline AvaiancaTaca raised Col$500 billion ($278 million) with an IPO and Grupo Aval raised Col$2 trillion with its April follow-on. Colombian local Corredores Asociados led both deals, and reportedly attracted order books that were five times and three times oversubscribed, respectively.
| "As these countries sell more stock internationally, there is going to be a huge opportunity for global banks" |
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However, despite the shut-out of international banks in Latin America, David Noble, managing director and head of equity capital markets for the Americas at HSBC, is examining how best to exploit opportunities.
