Grupo Mexico to raise $1.3 billion for rail unit

Grupo Mexico, a transport, mining and infrastructure company, is hoping to raise $1.3 billion from an initial public offering of its ITM rail unit.

According to Ferromex chief executive, Rogelio Velez in an interview with Ruters, the company still hopes to list ITM in the first half of the year. He also said they are expecting the offering to be in high demand.

Velez said that Grupo Mexico wants to list about 15 percent of the company’s stock. The listing would value the rail unit at around $8.7 billion, which is important being ITM is a key beneficiary of Mexico’s thriving auto manufacturing sector. Underwriters for the investment are Mexico’s Credit Suisse and GBM.

Last year, investment opportunities for the rail unit were slowed as a new anti-trust competition bill made its way through Mexico’s congress. The result of the new legislation is the generation of a rail regulator.

Velez said that Grupo Mexico would spend the IPO money on capital expenditure and new rolling stock. Grupo Mexico controls 75 percent of ITM, with the remaining 25 percent is owned by Carlos Slim.

Ferromex is ITM’s main and largest railroad in Mexico.