Exclusive: Getting into U.S. election spirit, Jose Cuervo postpones IPO - sources

October 5, 2016 2:24 PM EDT

A bottle of Jose Cuervo Tequila rests on a shelf in Mexico City December 11, 2012. REUTERS/Edgard Garrido

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By Roberto Aguilar

MEXICO CITY (Reuters) - Mexico's Jose Cuervo, the world's biggest tequila producer, has delayed its planned initial public offering and will wait until after the U.S. presidential election before going ahead, three people familiar with the matter said on Wednesday.

Speaking on condition of anonymity, the three people said concern about market volatility around the Nov. 8 U.S. election meant that Cuervo had decided to postpone the listing, which they said had been scheduled for this month.

Representatives for Jose Cuervo did not respond to a request for comment on the delay, which appears to be the first instance of a major IPO being postponed because of concern about volatility surrounding the election, which has already roiled markets in Mexico.

The company, known officially as Becle, announced the IPO slated for the Mexican bourse in a filing last week, but without saying when it would take place. It also plans a private placement to investors in the United States, where the tequila market has increasingly been shifting toward high-end 100 percent agave brands.

A person familiar with the matter said last week the company could seek to raise between $500 million and $1 billion.

Some investors in Mexico's currency and other instruments have grown apprehensive about the possibility of a win by Republican White House candidate Donald Trump, who has fired off a series of verbal broadsides against Mexico and its economy.

Trump has vowed to build a wall on the border with Mexico that he said he would make Mexico pay for and threatened to scrap the North American Free Trade Agreement if he wins. He has also berated U.S. firms that invest in Mexico.

Concern about the election has been more glancing on U.S. equity markets, where optimism had been growing about a rebound in IPOs after occasionally choppy markets had dampened enthusiasm for new issues for much of the year.

Jose Cuervo made reference to the U.S. election in its prospectus, noting that any renegotiation of trade deals after the vote could ultimately have a serious impact on business.

On Tuesday, Agustin Carstens, the head of Mexico's central bank, said the bank may not follow any impending interest rate increase by the U.S. Federal Reserve if the outcome of the U.S. presidential election is favorable to Mexico.

Last week Carstens said a Trump victory would hit Mexico like a hurricane, and that a win by Democratic nominee Hillary Clinton would yield a better outcome for the Mexican economy.

The company has said proceeds from the IPO, due to be handled by Morgan Stanley, JP Morgan Chase & Co, Banco Santander and brokerage GBM Grupo Bursatil Mexicano, will be used to fund organic and external growth, as well as broaden its portfolio.

Started by Jose Antonio de Cuervo in the late 1700s before Mexican independence from Spain, Jose Cuervo says it is North America's oldest continuous producer of spirits.

With origins in the picturesque town of Tequila in Jalisco state, the business is now controlled by the Beckmann family. They will remain the majority shareholder after the IPO.

(Additional reporting by Lauren Hirsch and Christine Murray; Writing by Dave Graham and Christian Plumb; Editing by Frances Kerry and Andrew Hay)

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