July 25, 2018 / 10:32 PM / 2 months ago

Mexico's new second bourse BIVA rings opening bell

MEXICO CITY, July 25 (Reuters) - Mexico’s second stock exchange, BIVA, launched on Wednesday in a bid to entice more companies to go public in Latin America’s No. 2 economy, increase investments and help spur sluggish economic growth.

The Bolsa Institucional de Valores, or BIVA, will compete with the Mexican Stock Exchange, which had been the country’s only stock exchange.

Mexico’s stock market has lagged other major emerging economies, with about 150 listed companies, compared with more than 340 in Brazil. Entrenched monopolies have limited competition, while family-run companies wary of market scrutiny have been reticent to go public.

“We should not fall into the trap that because the market is small, it does not need competition,” said Santiago Urquiza, the president of market infrastructure firm Grupo Central de Corretajes, or Cencor, that includes BIVA.

“You have to imagine that the market has a lot more potential than today.”

Urquiza said the growth of private capital funds in Mexico had been incubating “a new ecosystem” of companies that could soon be in a position to make public offerings.

Maria Ariza, BIVA’s director, who previously led Mexico’s private equity association Amexcap, said the exchange was in talks with a number of medium and large companies it hoped to bring soon to market.

Ariza said BIVA would lobby the incoming government of leftist Andres Manuel Lopez Obrador to make regulatory and tax changes that could encourage more initial public offerings and greater institutional investment.

The BIVA project has faced criticism from some of the major Mexican brokerages, which are joint owners of the Mexican Stock Exchange (MSE), that Mexico does not have enough public companies or liquidity to support a second exchange. Those brokers had to invest to connect to BIVA.

BIVA’s development was funded with 1 billion Mexican pesos ($54 million) from a private equity trust held mostly by four Mexican pension funds as well as unspecified investments by Cencor, Urquiza said.

BIVA is running Nasdaq’s latest exchange platform and the bourse has partnered with London Stock Exchange Group’s FTSE Russel to build indices.

The first, the FTSE BIVA Index, includes 50 companies, with more mid-cap firms and some real estate investment trusts, compared with the 35 companies on MSE’s benchmark index, the S&P/BVM IPC stock index.

Liquidity in Mexico is concentrated in its biggest companies and BIVA hopes to draw in more institutional and individual investors, Ariza said. (Reporting by Michael O’Boyle; Editing by Peter Cooney)

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