The potential of Mila

Mila, the Andean stock exchange tie-up that harmonises electronic trading between the Chilean, Colombian and Peruvian bourses, has been something of a slow burner.

The project, which creates Latin America’s second biggest market after Brazil by market capitalisation, has delivered lacklustre volumes after debuting amid global economic gloom and lingering regulatory and tax complications. 

But another financial sector tie-up announced on Tuesday shows it still has legs.

Mila, after all, is well placed to facilitate integration among some of the world’s fastest growing economies. 

The region’s juggernauts Brazil’s Bovespa and Mexico’s Bolsa Mexicana de Valores have made noises about joining up, offering the prospect of much greater liquidity and range, with companies like Bimbo, the world’s biggest baker, Carlos Slim’s America Movil, Eike Batista’s oil company OGX and Brazilian bank Itaú-Unibanco.

In Colombia, initial public offering activity picked up notably last year, boosted in large part by GrupoSura’s $1.8bn issue to fund its purchase of ING Group’s Latin American pension and insurance assets. In all, the year delivered nine deals worth an estimated $6.5bn. 

Chile had 16 issues worth $5.7bn and Peru a lonesome issue worth $45m.

Increasingly, these countries’ biggest companies are expanding their reach across the region. 

Chilean retailers such as Saga Falabella and Ripley dominate Peru’s department store offerings, and Chilean financial groups such as Banco Falabella, Celfin Capital and LarrainVial have established footholds in Peru and Colombia. 

Colombian banks such as Bancolombia and Davivienda have been acquiring banks in Central America.

Tuesday’s confirmation that Peru’s Banco del Credito is buying at least 60 per cent of IM Trust, a Chilean brokerage, is further evidence of regional integration. 

BCP had already bought a 51 per cent stake in a Colombian brokerage, Correval, last December.

Dionisio Romero Paoletti, president of Creditcorp, BCP’s parent group and Peru’s biggest financial services company, told reporters in Chile the acquisition would help it create a regional investment bank to cater for investors as part of an expansion fueled in part by Mila.