Alpek SAB (ALPEK), Mexico’s largest privately owned petrochemical company, is planning the nation’s biggest ever initial public offering, ending a nine-month lull in new listings.

Alfa SAB (ALFAA), the conglomerate that also owns auto-parts and processed-foods companies, is selling a stake in Alpek after Mexico’s benchmark index rallied to a record high this month and Brazil and Colombia snapped IPO droughts. Alfa plans to raise as much as 11.2 billion pesos ($851 million) from the sale of 17.9 percent of Alpek, which makes polyester fiber used in clothing and expandable polystyrene for packing material.

“The IPO market is starting to show some signs of life,” said Ed Kuczma, who helps manage $34 billion including Mexican shares at Van Eck Associates in New York, speaking in a telephone interview. “Mexico’s been slow to have deals come out, and it’s good to see deals pop up and give investors a chance to participate.”

While Alpek’s deal is poised to overtake OHL Mexico SAB’s 9.7 billion peso offering in 2010 as the country’s largest, the sale is dwarfed by Brazil’s biggest IPOs, including a 3.66 billion reais ($1.95 billion) transaction yesterday by Banco BTG Pactual SA. Banco Santander SA, the Spanish bank whose Mexican subsidiary is weighing a Mexican listing, raised a country record 13.2 billion reais in Brazil in October 2009 by selling its local unit.

First Since July

Alpek’s sale will be the first in Mexico since July, when lender Banregio Grupo Financiero SAB (GFREGIO) raised 1.8 billion pesos, as Europe’s deepening debt crisis curbed demand for emerging- market assets. Nine companies had outstanding exchange filings to hold IPOs in Latin America’s second-biggest economy, Javier Artigas, head of strategic planning at the exchange, told reporters on Jan. 10.

Alfa, which plans on keeping a controlling stake in Alpek, will price the shares between 27.50 and 31.50 pesos, according to prospectus filed with the local exchange.

Banregio has surged 16 percent since its IPO, while OHL has retreated 22 percent.

Microfinance business Credito Real SA and bus company Grupo Senda Autotransporte SA are among companies that have said they’re considering listing shares in Mexico.

Brazil’s first initial public offering since July, Sao Paulo-based car-rental company Cia. de Locacao das Americas, priced shares 36 percent below the upper end of its target. Unicasa Industria de Moveis SA, a furniture maker in Brazil, will announce the results of its IPO tonight. Colombian construction company Construcciones El Condor (ELCONDOR) raised 162.6 billion pesos ($91 million) in an initial sale this month.

Slim’s Frisco

The Alpek sale -- known as a carve out because Alfa will keep control -- would resemble an offering carried out in January 2011 by billionaire Carlos Slim’s holding company, Grupo Carso SAB. After that deal, Slim’s mining unit, Minera Frisco SAB, soared 26 percent in its first day of trading. It’s up 93 percent since the IPO, beating the 0.4 percent gain in the IPC.

“Alfa is seeking to maximize shareholder value,” said Ramon Leal, Alfa’s chief financial officer, in an April 11 telephone interview from London. The public offer gives Alpek “the opportunity to have more independence to pursue the projects that have been presenting themselves.”

Enrique Flores Rodriguez, head of Alfa’s corporate communication, declined to comment further.

Carve outs can help pull in new buyers because investors sometimes shy away from hard-to-value conglomerates, according to Josef Schuster, founder of Chicago-based Ipox Schuster LLC, which has about $2 billion tied to indexes that track IPOs.

Polyester Sales

Alpek, based in San Pedro Garza Garcia, Mexico, has 20 plants in three countries and had sales of $7.3 billion last year, about half of Alfa’s $14.7 billion total. First-quarter revenue rose 13 percent to $1.1 billion amid higher polyester sales in North America, the company said in a filing with the Mexican stock exchange.

“It’s a stable old company, and from a diversification perspective it makes good sense,” said Schuster, who said he’s considering participating in the sale. Carve-outs in other markets “have been very successful.”

Alfa fell 0.9 percent to 187.74 pesos in Mexico City trading yesterday. It’s up 24 percent this year, compared with a 4.8 percent advance for the benchmark gauge, which rose April 2 to a record high 39,963.64. The benchmark needs to climb another 2.9 percent to surpass its historic high.

Citigroup Inc., HSBC Holdings Plc, Credit Suisse Group AG and Morgan Stanley are managing the Alpek share sale.

Bloomberg