OREANDA-NEWS. Unifin's corporate governance practices and overall financial profile would be strengthened by a planned IPO, particularly considering its aggressive growth strategy (46% in 2010-2014), Fitch Ratings says. The offering could also prompt similar moves by other Mexican non-bank financial institutions (NBFIs).

Historically, tight capitalization ratios have constrained the company's ratings. We believe the IPO could relieve some of that stress. A stronger capital base could also allow Unifin to reduce the concentration of its top clients as a percent of capital, while future growth fostered by the IPO might also moderately improve the entity's overall borrower concentrations.

Unifin plans to complete an IPO in the second quarter of 2015 for roughly MXN4.0bn, of which approximately 50% will come from the primary offering. The offering will be public in Mexico and private in the international markets through a Rule 144A/Regulation S offering.

We believe other NBFIs will watch the IPO closely as the expected economic recovery may make the capital markets attractive for funding growth. Many NBFIs have access to the Mexican debt market and a successful IPO could diversify their funding sources. Mexico's economy is forecast to begin to recover in late 2015, pending the effects of the decline in oil and government reforms.

A successful IPO would also be positive for Unifin's securitizations. In our view, improving the lender's loss absorption capacity would make originating new lease contracts more frequent and raise the number of assets that can be securitized. An increase in the amount of securitized assets in the current issuance trusts (that comply with existing eligibility criteria) would result in higher over-collateralization levels.

Unifin's main operation is centered on leases of transport and equipment, auto financing and lending to small and medium-sized enterprises as well as individuals carrying out business activities in Mexico. While Unifin is smaller than most banks in Mexico, it is one of the biggest players in this business line.