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AOL Latin America IPO fuels Net frenzy
By Shasta Darlington
SAO PAULO. Jan 21 (Reuters) - Investor fascination with Latin American Internet stocks could turn into a frenzy now that world Internet leader America Online is taking its Latin American unit to the Nasdaq exchange, industry watchers say.
AOL Latin America -- a joint venture between AOL and Venezuela's Cisneros media group -- said Jan. 20 it is offering $575 million in stock to investors hankering for a bite in the region's fast-growing Internet industry.
"Any tech investor who didn't already have Latin America on his or her radar screen certainly will now," said Lucas Graves, an analyst at Jupiter Communications in New York. "The interest and fervor was mounting before...this confirms it."
With Internet use growing at more than 40 percent a year, Latin America is one of the world's hottest online markets and a required play for global investors.
The furor started when the StarMedia Spanish- and Portuguese-language Internet network launched its shares, becoming the industry's first Latin American play.
Investor interest hit a new high with the stock market debut in November of Spain's Terra Networks -- a unit of Telefonica offering Internet services in Spain and Latin America.
Now the enthusiasm should skyrocket when for the first time a regional unit of AOL lists its shares separately from the mammoth parent company.
AOL Latin America said it plans to use the proceeds from the stock sale for expansion in interactive services, marketing and content development in the region, where it is a newcomer.
"Why Latin America? Because it's among the top growing regions in the world," said Eduardo Hauser, a vice-president at AOL Latin America. The company broke into the market less than two months ago when it launched its Brazil operations in November.
"From a Latin American standpoint, it's one more step toward calling investor attention to the very important market," he added.
Brazil, the only Latin American market where AOL offers Internet access so far, has not been an easy nut to crack. The company has struggled with sluggish sales, aggressive local competitors and a technical gaffe in which potential users were sent reggae music CDs instead of installation software.
"AOL Latin America isn't looking at such a rosy picture," Graves said. "But in the long run they're probably betting size and brand name will serve them well."
But the startup problems are not expected to dim investor interest in the IPO, which should unleash a new wave of Latin Internet listings, industry insiders said.
Companies that had been planning IPOs, like Brazilian Internet access provider Universo Online (UOL) and Patagon.com, the Miami-based online financial firm, could rush to market hoping to grab some of the AOL spotlight.
"The pioneers are opening the market and paving the way for the second wave," said Stelleo Tolda, one of the country managers for Argentine online auctioneer Mercado Libre which plans to launch its own IPO.
The early action is likely to be concentrated in Brazil, home to about half of the region's Internet users and more than two thirds of its electronic commerce. New listings could soon be seen from local companies ZipNet, iG and Submarino among others. |
