Latin America’s pandemic-fueled boom in online shopping is paving the way for the first initial public offering in Colombia’s stock exchange in almost a decade
LatAm Logistic properties, which owns and operates warehouses in Costa Rica, Colombia and Peru, is looking to raise as much as $225 million in the share sale, expected to price Aug. 4. The company, known as LLP, will use the funds to expand in the three countries it already operates in and to enter Chile, Panama and Ecuador this year, according to Chief Executive Officer Mike Fangman.
As Covid accelerated the shift toward e-commerce, retailers have a growing need for more storage space, typically requiring three times the square footage in a warehouse that they’d need for a brick-and-mortar store selling the same amount of goods, according to Fangman. With its growth plan, the logistics company plans to more than double its gross leasable area to at least 1 million square meters (10.7 million square feet) by 2025.
“There’s a real opportunity with the e-commerce players,” Fangman said in a video interview from San Jose, Costa Rica. “Colombia we think is the market and the stock market that has the most potential for growth.”
Through a book building process — which is a first in Colombia’s stock exchange — LLP is offering to sell as many as 126 million shares at a price between 5,000 pesos ($1.30) and 7,500 pesos. BTG Pactual is leading the sale.
The last time Colombia’s stock exchange saw an IPO was in November 2012. The size of the stock market is constrained by Colombia’s relatively small economy as well as disclosure rules that discourage some businesses from listing, according to Juan David Ballen, head analyst at brokerage Casa de Bolsa in Bogota.
LLP is seeing “a lot of interest” from big investors in the U.S. in addition to demand from institutional and retail buyers in Colombia and Latin America, according to Fangman.
“The logistics sector as a way to play the e-commerce sector is really hot right now,” he said. “We’ve got a lot of good demand from these international investors that want to participate in a growing region.”null
LLP will likely also sell more green bonds to help fund its expansion, said Fangman. The company issued $19 million of debt in 2019 in Peru to finance an energy efficiency project.
Although Colombia’s stock exchange said in March it expected three IPO’s in 2021, LLP is its first to announce its intentions. Social unrest earlier this year, and the country’s loss of its investment-grade credit rating, may have hindered some of those plans. Fangman however, expects his company’s move to set the stage for other listings in Colombia.
“We see a lot of companies in Colombia that need capital for growth,” Fangman said, pointing to the nation’s population of 50 million as a big driver of consumer demand. “Colombia is going to evolve faster than maybe a lot of people think.”