SEC approves Del Monte PHL IPO

CANNED FRUIT manufacturer Del Monte Philippines, Inc. (DMPI) has secured approval from the Securities and Exchange Commission (SEC) for its proposed P17.5-billion initial public offering (IPO).

SEC Officer-in-charge for the Office of the Commission Secretary Armando A. Pan confirmed the approval of the issuance in a text message to reporters on Thursday.

DMPI has proposed to sell 587.44 million common shares at up to P29.88 each. Upon listing, this will give the company a public float of 21%.

A Reuters report earlier tagged the planned sale as the fifth largest IPO in the country in 15 months, and the largest in Southeast Asia for a food and beverage firm in nearly six years.

Net proceeds raised from the issuance will be used by DMPI’s parent company, Del Monte Pacific Ltd. ( DMPL), to partially prepay or repay certain loan facility or facilities of around P6.8 billion. Around P3.544 billion will be used to repay certain payables, while it will also allocate up to P6 billion to refinance or reacquire certain financial obligations of the DMPL group to reduce its leverage positions.

“The prepayment of these loans will allow the DMPL group to deleverage and strengthen its balance sheet. Such prepayments are allowed under the loan facility/agreement without any fee of penalty,” the company said.

BDO Capital and Investment Corp. has been tapped as issue manager, sole global coordinator, and sole book runner for the issue.

Analysts noted that while there is appetite for a new issuance in the market, this may be affected by timing and market forces.

“There is ( appetite) but I think it has been diminished not because of ( DMPI) but timing and market forces as opposed to maybe a year ago,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message.

“But at the same time market would like another issue to invest in. Market has fallen substantially already so downside seems limited albeit any sudden macroeconomic shocks,” Mr. Limlingan added.

Diversified Securities, Inc. Equities Trader Aniceto K. Pangan noted that it would “be advantageous” for the IPO if it will be conducted “once all the current issues have been resolved, such as inflationary concerns and the weak peso.”

The stock market has seen volatility in the past few months, steadily declining since February after its steep climb to the 9,000 level near the end of January. Mr. Pangan, however, sees the market stabilizing soon, as it has so far secured a strong support level.

“They’re seeing the stability of the market already at this point, considering that it has not broken the major support of 7,500,” Mr. Pangan said via phone.

DMPI is an indirect subsidiary of DMPL through Del Monte Pacific Resources Ltd.’s Central American Resources, Inc. It sells canned pineapple juice and juice drinks, canned pineapple and tropical mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup.

The company has initially targeted to debut at the PSE in April, but decided to push back its offering to May to give way to bigger share sales that totaled P110 billion at the time, from lenders Metropolitan Bank & Trust Co. and Bank of the Philippine Islands.

In the nine months ending January 2018, DMPI reported a 7.6% increase in revenues to P21.24 billion, which led to a 3.2% increase in net income to P2 billion.

Earlier this month, the SEC also cleared the P15.5-billion IPO of construction firm D.M. Wenceslao and Associates, Inc.