E-Commerce Giant MercadoLibre Raises $1.6 Billion in Share Sale

E-commerce retailer MercadoLibre Inc, Latin America’s most valuable company by market capitalization, is looking to raise funds with a follow-on share offering.

Bloomberg — E-commerce retailer MercadoLibre Inc, Latin America’s most valuable company by market capitalization, has raised $1.55 billion in its first equity offering in over two years.

The company sold a million shares at $1,550 each, according to a press release, representing a discount of about 5% to Monday’s closing price. The company looks to spend the proceeds on “general corporate purposes,” according to a prospectus published late Monday.

MercadoLibre has boomed since 2020 as the coronavirus pandemic led a growing number of Latin Americans to buy more online and increasingly turn to digital payment options. The company continued hitting milestones in the third quarter: on the e-commerce front, it posted record gross merchandise volume of $7.3 billion, while its fintech arm saw its credit portfolio grow to over $1.1 billion.

“Our current cash generation profile is enough to fund our upcoming investments, but we want the flexibility to accelerate without having to tape the markets in a hurry,” said Andre Chaves, a senior vice-president at the company, in an interview. “Investors are focusing on the long-term story.”

Chaves pointed to the large needs that come with growing its logistics initiatives, one of the company’s expansion areas across the region. He added that they company doesn’t have acquisitions of an equivalent size of the offering in the pipeline.

Shares of MercadoLibre fell as much as 7.2% at the market open in New York.

The company last sold shares in March 2019, when it raised $1.9 billion through a public share offering that included a direct investment from companies including PayPal Holdings Inc. Earlier this year, the company sold $1.1 billion in bonds that included a $400 million tranche of sustainable debt. At that time, it said part of the proceeds would be used for the expansion of its electric delivery fleet.

Following the capital raise, MercadoLibre could invest more in logistics, expand services and products and also increase its inventory bargaining power, according to Ignacio Arnau, a fund manager at Bestinver Asset Management in Madrid. A potential M&A move “could arguably save a lot of time and money” too, Arnau said.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC are running the sale.

--Updated to reflect the amount of the shares sale in the title as well as comments by a company executive and by a fund manager.