While countries like China and Brazil get much of the attention for their growth rates, many other emerging economies also have posted strong performances over the years. One is Peru. In 2010, the gross domestic product grew by 8.8%, and it is estimated to increase by 7.5% in 2011.
Well, IPO investors will soon have a chance to participate in Peru. Cementos Pacasmayo, which is Peru’s largest cement producer, has filed to go public in the U.S. The lead underwriters include JPMorgan (NYSE:JPM) and Banco Santander (NYSE:STD).
The origins of Cementos go back a hundred years, with the efforts of German mining engineer Mauricio Hochschild. He created the Hochschild Group, which built a variety of strong businesses in Latin America. Then by 1956, the firm acquired the controlling interests in Cementos, which controlled the cement market in northern Peru.
It turned out to be a great investment. Cementos has become one of the world’s most profitable cement manufacturers. For the first nine months ended Sept. 30, 2011, the company generated $71.5 million in adjusted pretax earnings, which comes to an operating margin of 27.6%.
A key growth driver has been Peru’s construction market. The housing sector is mostly underinvested and, as a result, is getting lots of traction. Consider that from 2006 to 2010, Cementos grew its cement volume by a compound annual growth rate of 12.8%.
In terms of reserves, the company is in a strong position as well. Cementos’ quarries have enough supply of limestone for approximately 70 years, assuming current production levels.
And another advantage for Cementos is its independent retail distribution network, which includes 130 retailers of small, local hardware stores. It has been a smart way to create a brand as well as get premium prices.
No doubt, Cementos does not have the excitement of a Groupon (NASDAQ:GRPN), Zynga (NASDAQ:ZNGA) or LinkedIn (NYSE:LNKD). But the company has a steady growth rate and a lock on its market, which should continue to see strength for the long haul.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.