eBay of Latin America: Mercado Libre CEO Marcos Galperin (Part 6)

SM: So you grew well through 2006, and in 2007 you went public. How was the IPO received in the investor community?

MG: Very well. The stock went up quite a bit. We were quite unlucky in that we did our road show in the middle of the sub prime crisis. The day we priced, the market broke 400 points, and the day our stock went live was the day the Fed, the European Central Bank and the Bank of Japan, all intervened in the markets and gave liquidity, which was something that had not happened since 9-11. Despite that, the stock preformed – we went out at 18 and the stock is now trading at above 40.

SM: Your investor base is mostly institutional investors, right?

MG: Mostly US institutional investors.

SM: US Mutual funds?

MG: Today we do not have a very clear picture of exactly who holds our shares. During the IPO, Tiger and General Atlantic both put a relatively large allocation. We need to see results of the most recent quarter. We believe there are other large funds which have been buying our shares, but we have not been able to confirm that.

SM: Is there a particular type of analyst who is responding to the stock, such as Latin American analysts or technology analysts?

MG: Mostly it is the technology analysts, and recently we have received some Latin American coverage. In our road show, we have focused much more on the technology global growth investors. We think as shareholders, they are much more likely to add value. They have seen different stories in different parts of the world, and understand the differences in business throughout the world.

SM: They won’t panic either.

MG: No, they won’t. They understand the challenges and know what we are doing to address them. They can also see where the future market is going. One of the companies I have mentioned today during the morning sessions was bought by one of our shareholders. [AKQA was acquired by General Atlantic.] It adds value to us to be able to have them on board.

SM: What is the plan going forward? The IPO went well, the market is going well, adoption is increasing – where do you see yourself going now?

MG: Continuing to focus on what we are doing. We got into our industry in the very early stages in Latin America. We want to continue being very concerned about the trends going on. We need to focus on regional trends to ensure we know what to change and where to adapt to successfully grow in the region. I think for the next 5-10 years we will continue to focus on that rather than on anything else. We have our open payments platform [Mercado Pago] in Chile. Originally it was a closed system with an escrow component, and would not work outside of Mercado Libre. We converted that to an open system, much like the PayPal model, and we believe that is a powerful business opportunity.

This segment is part 6 in the series : eBay of Latin America: Mercado Libre CEO Marcos Galperin
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