Breakout

The One IPO on Earth That Might Matter…And It’s Not Twitter

Jeff Macke
Breakout

Twitter (TWTR) finally went public and it didn't seem to matter much to the market as a whole. On the extreme margin it seems slightly bullish that the New York Stock Exchange (NYX) was able to handle a roughly $2 billion IPO, but in the grand scheme of things the world looks much the same as it did before Twitter went public.

Related: 4 Reasons Twitter's IPO Rocked Where Facebook's Rolled

That's vaguely disappointing, but David Garff of Accuvest says investors looking for a place where IPOs still matter don't have to go very far. In the attached clip Garff makes the argument that Mexico has a potential game-changing initial public offering waiting in the wings. The company is Pemex. It's the biggest enterprise in Mexico and one of the largest companies in all of Latin America. Despite its gargantuan size, Pemex remains untapped as a source of equity.

According to Garffe, that's going to change. Relatively new Mexican President Enrique Pena Nieto is looking at a privitization that could create some liquidity and legitimize the IPC Mexican Index (^MXX) in one shot. "That's something where you could broaden significantly the reach of an index where 50% of the capitalization is in the top 5 names."

The fact that Pemex is a relatively old, slow-growth company supports Garff's bullish thesis. Most stable companies are looking to debt rather than equity markets for their funding. A Pemex IPO would make the IPC Mexican Index more stable on the equity side, improving the prospects for the market as a whole.

The situation is unique to Mexico and Pemex. Unless or until Pemex comes to market, Garff is taking a wait and see approach. When it happens, you'll almost certainly be alerted to the news via Twitter.

More from Breakout:

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