Mexico’s tech startups may be enjoying a boom, but their top stars are unlikely to list on the country’s stock market, stock exchange CEO José Oriol Bosch told Reuters in an interview.
Mexican start-ups like Stori and Kavak helped raise a record $3 billion in 2021, according to entrepreneurial group Endeavor, but getting those kinds of companies listed locally — even in a bull market — will be a tough task, he said. the owner of the Mexican Stock Exchange (BMV).
“If any of the ‘Mexican unicorns’ had come out here, it would have been a disaster,” he said, arguing that they would not have obtained “the multiples that were paid on the Nasdaq.” “If I were a unicorn (…) I would also go to the Nasdaq,” he added.
The Mexican Stock Exchange is facing a shortage of new stock offerings, as it has not hosted a single IPO (initial public offering) since 2017, in addition to seeing a series of recent delistings such as that of Aeroméxico.
“It worries me and it takes up my time,” Bosch admitted, adding however that the problems facing the local plaza are largely structural. “It’s not necessarily in our hands,” he acknowledged.
The lack of IPOs for tech companies has also affected larger markets like London, as US market valuations and private equity buyouts have dragged domestic startups elsewhere. Brazilian technology companies, such as Nubank, have also pursued the appeal of the United States.
The Mexican Stock Exchange seeks to boost the demand of retail investors with financial education and a museum for its 100-year history. The government of Andrés Manuel López Obrador has also offered tax exemptions for going public locally, although Bosch clarified that this has so far been ineffective.
A consortium of four Latin American national exchanges, MILA, which Mexico joined in 2014, also initially raised hopes, but “has not worked” to strengthen local markets, he added.
Still, he maintains that the stock market is a marginal part of the BMV’s business, which has had record annual revenues for several consecutive years from its debt-raising products and information services.
The Stock Exchange, which is also listed on the market, is interested in being seen as a leader in technology and its low level of indebtedness makes a major acquisition feasible in the short term. “We are in a position today where we are open to looking for growth,” Bosch said.
However, as a public company, the Exchange is also susceptible to market volatility. Its shares are down 18% in the past year, versus a 6.3% decline for the benchmark index. The institution has not commented on the drop in its price.
However, it may have to respond to investors, who want stock markets around the world to attract new players to prevent them from starting to resemble museums themselves.
