While the market-friendly policies of the administration of President Mauricio Macri have been welcomed by international investors and local businesses alike, the prevailing view of initial public offerings (IPOs) has become increasingly bearish.

Although there were two new listings in 2016 and three in 2017, only the 2016 IPOs are still trading in positive territory, whereas the shares floated in 2017 are trading down by as much as 40%. As in many emerging markets, given ongoing monetary policy tightening in the US, shares issued in early 2018 have posted a similarly muted performance, leading to the postponement of several IPOs originally slated for 2018.

Starting Off

The first and most successful IPO in 2016 was that of local bank Grupo Supervielle, which raised $301m through a dual listing in New York and Buenos Aires. It was the first Latin American firm to list on the New York Stock Exchange (NYSE) in a year. Investor interest has remained firm in the two years since the company listed, with its American depositary receipts up 22.4% to date as of end-July 2018, at $13.46.

The year also saw confectioner and coffee shop franchise Havanna Holding launch an IPO on the Buenos Aires Stock Exchange (Bolsas y Mercados Argentinos, BYMA), raising $114.7m with shares priced at AR37 ($1.92). Although the sale was oversubscribed by a factor of two, shares registered a sharp decline in the first months of trading; however, they rebounded to trade at AR47.50 ($2.46) as of end-July 2018, up 35.7% to date.

Gaining Momentum

Argentine companies raised a combined $3.8bn in overseas equity sales in 2017; however, share prices have faltered in the year since. The first deal came from online travel agency Despegar. com, which raised $332m on the NYSE. While the IPO had been priced at $26 at the upper end, the stock opened at $29 and hit a high of $31.50 in its first days of trading. However, as of end-July 2018 shares were down 27.5% at $21.02. In October 2017 the country’s leading producer of cement, Loma Negra, raised $954m in the largest Argentine IPO in over two decades. The company opened trading at $21.65 per American depositary share (ADS), instead of the expected $19; however, waning investor appetite for emerging market equities has seen the price fall 40.8% to $11.24 as of July 2018.

At the end of 2017 Laboratorios Richmond became the first Argentine pharma company to go public through a local IPO, raising AR524m ($27.1m) on a per share price of AR37 ($1.92). However, the stock has not fared well in the intervening months, falling 23% to AR28.50 ($1.48) as end-July 2018.

Year to Date

The IPOs conducted in early 2018 paint a similarly bearish picture. In February Corporación América Airports, the country’s largest airport operator, raised $485m through its inaugural IPO in New York. However, shifting market conditions – evidenced by a four-year high in 10-year US Treasury yields amid a broader equity sell-off – saw shares open at $17, rather than the expected $19-23. By the end of July 2018 shares were trading down 34.5% at $11.15.

Central Puerto, the country’s largest private power producer, carried out a dual listing in Argentina and New York in February, but placed just half of the shares initially planned, and at a lower price range. It sold 20m ADSs at $16.50 each, compared to a suggested range of $17.50-21.50. By July they were down 30.9% at $11.40.

Maybe Later

Given the lacklustre results of 2017-18, and the peso’s more than 30% retreat against the US dollar, several firms have postponed planned IPOs. Food processor Molino Canuelas suspended its November sale, which had sought to raise $333m, and has instead contracted France’s Lazard to restructure its debt. Biotech firm Bioceres, meanwhile, delayed plans to raise $120m through a listing on the NYSE. The postponement comes despite a three-fold increase in biotech IPOs in the US since 2017. Real estate developer TGLP similarly cancelled plays to cross-list in the US, and renewable energy producer Genneia has not issued further updates on its plans to list on the NYSE and BYMA.