Latin America Equity Issue: Grupo Aeromexico’s US$275m IPO
Long haul; smooth landing
Grupo Aeromexico’s three-year journey from emerging from bankruptcy to accessing the public equity markets was turbulent. It faced headwinds from dual presidential elections, trade tensions, navigating two regulatory jurisdictions plus neither the company nor its former creditors-turned-shareholders were particularly interested in selling in the NYSE/Mexican Bolsa IPO.
“Originally, we were thinking of doing an entirely secondary offering,” said Aeromexico CFO Ricardo Javier Sanchez Baker. “When we got to the final stages of the IPO process, a lot of the existing shareholders expressed reluctance to sell because they felt there was an upside [to the valuation], we decided to do a primary component even though we did not need the resources.”
Barclays, Morgan Stanley, JP Morgan and Evercore were joint lead bookrunners on the sale in November of 7.4m primary and 4.3m secondary ADS at US$19 each, the midpoint of the US$18–$20 marketing range. To satisfy the concerns of Mexican regulators over foreign ownership, another 27.5m ordinary shares, including 20.5m from shareholders, were sold to local investors at Ps35.34 (US$1.90), raising US$275m in total. Each ADS represents 10 shares.
The Mexican flag carrier had completed a US$671m debt-for-equity swap as part of its restructuring and came to market with less than two times' leverage, allowing it to earmark IPO proceeds for fleet expansion and general corporate purposes.
The offer valued the airline at 3.5 times' EV/Ebitdar for 2026 versus 4.5 times for Chilean carrier Latam Airlines.
Aeromexico made a US$204.6m distribution to shareholders shortly before the IPO, subject to a 180-day lockup after the IPO. Delta Air Lines, a 20% shareholder and strategic partner, agreed to not sell any shares for four years.
Par Investment Partners agreed to invest US$25m through a private placement alongside the IPO. Par, which had invested in other airline IPOs, secured a 5% discount to the IPO price and is locked up for 180 days.
Apollo Global, Banco Actinver and Silver Point Capital were among the consortium of former creditors that sold stock on the IPO, with Apollo as a bookrunner on the IPO.
Aeromexico, which had previously been listed domestically, had hoped to go public in the US in late 2022 not long after exiting Chapter 11 bankruptcy protection. The carrier conducted multiple rounds of testing-the-waters marketing.
“We had a lot of external challenges, from elections in the US and Mexico to judicial reform in Mexico,” said Sanchez Baker. “And we had internal challenges because we had different types of investors who had different views on how the transaction should take place.”
While the NYSE listing was a difficult process, coming well over a year after the public filing and during the US government shutdown, demand was 10 times the deal size. Initial trading has disappointed, with shares slightly below issue as of late November, but the long-term goal is to create trading liquidity that will allow the shareholder register to rebalance and to deliver returns.
“There is a premium that companies get from having a stock with proven trading liquidity,” said Raul Martinez-Ostos, Barclays' CEO for Mexico and Latin America. “You want to get there but you don’t want to rush things.”