Nemak, an automotive foundry group that produces aluminum cylinder heads, engine blocks, transmission parts, and automotive structural components at 34 locations in 14 countries, is planning an initial public offering to start June 30. The company intends to raise $863 million.
The Monterrey, Mexico-based organization said the proceeds from the sale would fund growth plans and general corporate initiatives.
Nemak told potential investors it would issue 618 million shares, publicly in Mexico and through private placements elsewhere, including overallotments (a provision that allows the stock underwriters to expand the number of shares offered as long there is demand for the issue.)
Currently, Nemak is majority-owned by Grupo Alfa, a Mexican conglomerate that lately has been plagued by low energy prices impacting that part of its portfolio. It’s also seeking cash to expand its holding of an oil-and-gas exploration concern, Pacific Rubiales Energy Corp.
According to one report, Nemak represents more than 25% of revenue for Alfa. Ford Motor Co. holds a 6.8% share of Nemak, which was founded as a joint venture of Ford and Alfa.
In April, a Bloomburg BusinessWeek report included an analyst’s speculation that listing Nemak separately could draw investors’ attention in spite of weak energy-demand and consequent market performance by Grupo Alfa.
By contrast, the group’s foundry products holdings have thrived in recent months, supplying automakers worldwide. It announced late last year it would build a new, aluminum high-pressure diecasting plant in Monterrey, to supply growing demand from automakers in Mexico and the U.S. for lightweight cast parts.