Vista Oil & Gas on Thursday burst on to the Mexican stock exchange in a successful initial public offering, promising to become a “Latin American champion” in the energy sector.
Vista raised $650m through the sale of 65m units at $10 per unit, the maximum permitted and well above expectations, in the third-biggest IPO in Mexico since 2015. Vista had initially expected to raise $500m.
The venture, backed by Miguel Galuccio, the former boss of Argentina’s YPF, and energy-focused private equity firm Riverstone, is the first oil and gas company to be listed on the Mexican market, and opens a new asset class as the country’s first special purpose acquisition vehicle, or Spac.
About half the backing came from institutional investors in Mexico, notably pension funds, and the rest from abroad, especially the US.
A Spac has two years to make an acquisition, either of a company or of assets in operation. Mr Galuccio, who is looking actively at prospects in Mexico, Brazil, Argentina and Colombia and sees Venezuela as an opportunity in the future, said he did not expect it to take that long.
“In the first year we’ll have to have something [an acquisition] . . . I have various ideas . . . Mexico could be the first play,” he told the Financial Times.
“We have the vision of becoming a Latin American E&P champion — positioned between the NOCs [national oil companies] and the companies that are already operating in each target country . . . We are ready to engage in M&A discussions, we have the capabilities, network and financial flexibility to execute a deal swiftly,” he added.
The quartet of countries initially targeted by Vista have opened their sectors through reforms, which have multiplied investment prospects, especially in Mexico, where energy was under the yoke of the state for nearly 80 years.
“[These countries] have never been open for business at the same time before: the opportunity for establishing a pan-regional exploration and production company is now,” Mr Galuccio said.
Vista aims to leverage Mr Galuccio’s strong record and Riverstone’s experience to grow rapidly. Another Riverstone-backed Spac, Silver Run Acquisition Corp headed by former EOG chief Mark Papa, went public in the first quarter of 2016 and had achieved a market capitalisation of $4.1bn a year later. Mr Galuccio tripled YPF’s market capitalisation to $15bn.
The Argentine chief executive may not have to limit himself to companies worth $650m: Spacs have been able to vie for companies with valuations well beyond their IPO proceeds. Silver Run raised $450m in its first offering but its first acquisition was a company worth $1.7bn, for instance. In addition, “the beauty of a Spac is that you can also pay [the seller] with shares and allow them to participate in the upside,” Mr Galuccio added.
Mr Galuccio, who joined YPF from oil services company Schlumberger, ruled out high-risk deepwater exploration targets or super mature marginal fields. “I want to build a portfolio with exploration, development and production, across plays where our technology, capabilities and know-how can make the difference,” he said, adding that could be both onshore and in shallow waters.
At the helm of YPF, Mr Galuccio led the drive to develop Argentina’s vast Vaca Muerta shale play. “Vaca Muerta is obviously on our radar, we believe we have a unique edge there,” he said.