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ECONOMY | 04-06-2024 15:07

Oil driller Aconcagua eyes Argentina IPO as Milei lures capital

President’s move to open up economy creates market opportunity; Gas company did first local listing since 2017 earlier in year.

Argentine oil driller Petrolera Aconcagua Energia SA is looking to finance an expansion with an initial public offering as President Javier Milei’s reforms entice capital back to Argentine markets, according to a person familiar with the matter.

The company is in the early stages of planning for the listing and would be ready to sell equity next year, said the person, who couldn’t be named discussing internal deliberations.

Aconcagua said last month that it’s bidding for ageing oil fields being sold by state-run giant YPF SA, as it moves to grow oil and gas production from the equivalent of 13,500 barrels a day. It isn’t clear yet if the Petrolera exploration and production unit would list alone, or whether the vehicle would be the broader Aconcagua Energía group that includes power generation and oil services, the person said.

Argentine credit and equity markets are starting to open up as Milei, a libertarian in his first year in office, draws the interest of investors with his moves to deregulate Argentina’s tightly controlled economy. Those initiatives include a pivot to free oil markets after years of intervention in crude and gasoline prices. Light crude in Argentina is now trading roughly 10 percent below international benchmarks, compared with about 30 percent when Milei took office.

Letting markets, rather than the government, have greater influence over energy pricing is a pillar of Milei’s reforms. Because of that, earlier this year natural gas distributor Distribuidora de Gas del Centro SA became the first company to list stock in Argentina for more than six years. Milei has been hiking fees charged by utilities distributors after they’d been kept in check by the previous government to contain inflation.

Of course, Aconcagua’s listing is no sure thing. IPOs take months to put together, by which time market conditions may weaken, especially if resistance to Milei’s reforms by voters and lawmakers grows.

Another Argentine company that’s paved the way for an equity sale is Corporación América Airports SA. The airport operator, which already trades in New York, filed a prospectus last year as part of a so-called shelf process that allows it to sell up to US$250 million of new stock in one or several offerings. But a spokesperson for the company said there are no immediate plans to go to the market.

 

 

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by Jonathan Gilbert, Bloomberg

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