Shell further trims IPO shares

Pilipinas Shell Petroleum Corp. has reduced the size of its initial public offering (IPO) to 291 million shares from an original offer size of up to 330 million shares because parent firm Royal Dutch Shell wanted to retain its ownership to at least 55 percent after the offer, its underwriter said.

The 291 million shares is comprised of a base offer of 275 million shares and an over allotment of 16 million shares, said BPI Capital Corp. chief operating officer and co-head for investment banking Reginaldo Cariaso.

This is compared to a previous offer of 300 million shares with an over allotment of 30 million shares.

“The reason the shares were reduced is that Royal Dutch Shell never wanted to dilute below 55 percent, post offer. The larger initial share size was to accommodate the other shareholders to sell shares,” Cariaso said.

The selling shareholders are Royal Dutch Shell subsidiary Shell Overseas Investments B. V., The Insular Life Assurance Co. and Spathodea Campanulata Inc.

“Insular and Spathodea did not want to sell any more shares and minority shareholders did not want to sell any. If we didn’t reduce the offer size, Royal Dutch Shell would fall below 55 percent,” Cariaso said.

Shell has set a price range of P64 to P70 per share from an initial filing price of up to P90 per share.

With the reduced share size, the oil giant is now expected to raise anywhere between P18.6 billion and P20.3 billion in proceeds based on the new price range.

Originally, Shell had planned to raise P29.7 billion from the sale of up to 330 million shares for up to P90 per share.

Shell is set to list on the Philippine Stock Exchange on Nov. 3 under the symbol SHLPH.

Shell has already commenced a series of meetings with investors within and outside the Philippines for the share sale and has received positive feedback and strong interest especially among foreign investors.

“The deal is doing very well. There is strong demand from domestic and international investors,” Cariaso said.

Shell has set the offer period from Oct. 19 to 25 and the price setting date on Oct. 13.

The company’s landmark IPO took 18 years and four administrations — Ramos, Estrada, Arroyo and Aquino -- to jumpstart.

The Oil Deregulation Act of 1998 mandates oil companies including Shell to list at least ten percent of their common stock within a period of three years since the effectivity of the law.

Shell plans to use the bulk of the proceeds of its IPO to expand its retail network and grow this to 1,220 by 2020.