Corporate regulator paves way for more IPOs
THE SECURITIES and Exchange Commission (SEC) has given Eagle Cement Corp. (ECC) and Cebu Landmasters, Inc. the green light to proceed with their respective initial public offerings (IPO), adding to the list of companies planning to go public this year.
In an en banc session on Thursday, the corporate regulator approved ECC’s application for a maiden listing of 500 million common shares with an overallotment option of 75 million shares priced at P16 apiece.
Cebu Landmasters also secured the SEC’s approval to list 505 million common shares with an over-allotment option of 75 million shares priced at P6.56 apiece.
Both approvals come at a time of continued robust growth of the property sector and a government commitment to ramp up infrastructure spending in hopes of spurring faster overall economic expansion that will lift more Filipinos out of poverty.
EAGLE CEMENT
ECC’s IPO will involve 11.5% of the company’s total 5,000,000,005 outstanding common shares.
An initial timetable puts sale period on May 2-9 and maiden listing on May 16.
The company — controlled by businessman Ramon S. Ang, president and chief operating officer of San Miguel Corp. — hopes to raise P8 billion from the primary offer and net P7.38 billion after deducting fees, commissions and expenses.
The cement manufacturer hired China Bank Capital Corp., PNB Capital and Investment Corp. and SB Capital Investment Corp. as joint issue managers, joint lead underwriters and joint bookrunners.
Net proceeds will be used to partially finance the construction of a Cebu cement plant and related facilities.
The company has said that it expects to start construction in the fourth quarter of this year and be completed in the first quarter of 2020.
The P9.5-12.5 billion project consists of a P7.5- to 8.5-billion integrated manufacturing plant that can produce up to 2 million metric tons (MT) of cement annually, port facilities worth P1-2 billion and cement terminals worth P1-2 billion.
Project cost includes acquisition of construction-related materials and services, as well as of properties on which the plant itself will rise.
ECC is currently expanding its operations with the construction of the third line of its Bulacan cement plant. The third line will bring the firm’s total production to 7.1 million MT or 180 million bags annually from 5.1 million MT equivalent to 130 million bags currently.
Eagle Cement estimates its market share at 30% in Metro Manila, Central Luzon and the Cavite-Laguna-BatangasRizal-Quezon region combined. The three regions account for about threefifths of the Philippine economy.
CEBU LANDMASTERS
Property developer Cebu Landmasters will be offering 34% of its 1.714 billion outstanding common shares to the public in order to raise P3.8 billion.
Up for sale will be 430 million for the primary offer and 75 million for an overallotment option.
The company hired BDO Capital & Investment Corp. as issue manager, along with BPI Capital Corp. as lead underwriter and bookrunner.
Cebu Landmasters is the first Cebu-based real estate developer to apply for an IPO. The firm will be using net proceeds from the maiden listing for expansion to five key cities in the Visayas and Mindanao. The funds will cover land acquisition worth P2.2 billion, debt repayment of P400 million and working capital requirements of P60 million, for a total investment of P2.6 billion.
The real estate developer is targeting to debut on the main board by mid-May.
WATCHING
“These IPOs will provide the investing public with two additional investment vehicles… the number of IPOs can also indicate whether sentiment is bullish or bearish, where more IPOs reflect a bullish sentiment and vice versa,” PNB Securities President Manuel Antonio G. Lisbona said.
“If investors see that they are getting a good deal, demand for offer increases,” he added.
“The use of proceeds is also critical, that is a good use of proceeds would be to expand business.”
AP Securities, Inc. equity trader Frank Gerard J. Barboza said he expects strong reception of ECC’s IPO, noting San Miguel’s work on the Tarlac-Pangasinan-La Union Expressway (TPLEx) extension. “Right now I like (ECC) because of (Ramon S. Ang)’s infra[structure] play on the TPLEx extension. The timing is impeccable.”
PNB’s Mr. Lisbona further noted that the timing of maiden share sales plays a significant role in traders’ sentiment.
“The market situation at the time of the offer is also very important,” he said.
“If the market is bullish, investors will buy ( probably even at a premium), but if the market is bearish, it will be hard to sell shares and it’s very rare for a company to issue shares at a discount to what it thinks is a fair value.”
Also pending with the SEC are IPO applications from Bermaz Auto Bhd for P1.24 billion, Pure Energy Holdings Corp. for P1.58 billion, Xeleb Technologies, Inc. for P751.8 million and Audiowav Media, Inc. for P2.66 billion.
Earlier this month, the SEC announced plans to hike float requirements to at least 15% for companies applying to go public.
Wilcon Depot, Inc. was the first company to go public this year, listing on the main board on March 31 after it raised P7.03 billion.