IPO for Jose Cuervo Tequila Looks to Raise More Than $700 Million

Jose Cuervo the Mexico-based tequila maker is seeking to raise over $700 million in its initial public offering, with 20% of its offer being soaked up by Temasek Holdings of Singapore, a presentation for investors showed Wednesday.

Jose Cuervo is offering 476.5 million shares that will be priced between 30 and 34 pesos a share in its February 9 IPO, said the investor presentation.

The largest maker of tequila in the world put the IPO on hold on two different occasions in 2016 after the U.S. election of Donald Trump as president helped to plunge the peso to new record lows and increased fears of a slowdown economically across Latin America’s second biggest economy.

Close to 15% of the overall offering will be referred to as an overallotment option that will be provided to the international investors and based on the demand.

Proceeds will be used for general corporate purposes as well as possible acquisitions to help drive global expansion.

Temasek subsidiary Aranda has committed to 20% of the overall offer, if the per share prices remains within the predetermined agreed upon range.

Cuervo will be helped by the pre-IPO commitment from Aranda. Those types of deals are common in major Asian IPOs, which help to provide stability to businesses by locking buyers in amidst uncertainty in the market.

A Temasek spokesperson confirmed the commitment of 20% that it valued at close to $175 million.

President Trump, who entered the White House just last week, promised to renegotiate and/or tear up the North American Free Trade Agreement the U.S. has with Canada and Mexico. He has also threatened to place hefty tariffs on companies that ship products into the U.S. market from Mexico.

The IPO timing, said one analyst could be due to an acquisition that is upcoming and will require a boost in cash or the more positive dialogue from Trump towards his southern neighbor is helping to boost Mexican shares.

The IPC index .MXX in Mexico has seen three straight sessions of gains, and is approaching levels not reached since the early part of November, prior to the U.S. presidential election.

In an IPO filing that took place earlier with regulators, the maker of tequila warned that the election in the U.S. could lead to its renegotiating its deals with clients, which could impact its business in a serious way.

The company was started in 1758 by Jose Antonio de Cuervo prior to Mexico’s independence from Spain. Its origin is in Tequila, a picturesque town in the state of Jalisco. The company holds 30% of the worldwide tequila market.

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