Philippine conglomerate San Miguel Corp has raised Ps5.4 billion ($131 million) from a fully marketed sale of shares in its subsidiary, San Miguel Pure Foods, after pricing at the bottom of the indicative range. The deal closed on Monday after a week of bookbuilding.
The offer was made up entirely of secondary shares sold by San Miguel Corp and the subsidiary does not receive any of the proceeds from the offering, according to a preliminary offering circular filed last week. San Miguel Corp, which owned 99.92% of San Miguel Pure Foods prior to the transaction, will use the proceeds for general corporate purposes. Given the small amount of shares in public hands, the deal was like a re-IPO of San Miguel Pure Foods.
Assuming the over-allotment is exercised, the share sale will boost San Miguel Pure Foods’ public float to about 15% from 0.08% and comes as the Philippine Stock Exchange has introduced a requirement for listed companies to maintain a public ownership of at least 10%. Those that fail to comply within the set timeframes risk being delisted from the bourse.
San Miguel Pure Foods was seeking to comply by the end of the year and the parent company undertook the offering to secure more liquidity in the stock, a source said yesterday.
The food company, which was formed in 2001 through the operational integration of the food businesses of San Miguel Corp and Pure Foods Corp, offers a broad range of food products and services to household, institutional and food service customers.
San Miguel Corp is a Philippine conglomerate whose traditional businesses include beer and food. It has recently expanded into oil, mining and power production.
The company priced the secondary share offer of 22.5 million shares at Ps240 a share. This will result in a deal size of $131 million. There is also an over-allotment of 2.5 million shares, which could increase the total proceeds to $145 million.
The final price compares with a closing price of Ps700 immediately before the bookbuilding started on November 12. However, the market price was deemed to be largely irrelevant given how illiquid the stock was prior to this sale.
Instead the shares were marketed at a valuation relative to regional comps. They were offered at a price between Ps240 and Ps300 each, which translated into a 2013 price-to-earnings ratio of between 10.6 times and 13.2 times, based on the joint bookrunner consensus, the source said. The final price represents a 2013 P/E ratio of 10.6 times, which puts San Miguel Pure Foods at a slight discount to its peers.
There are no main comps in the Philippines, so the bookrunners looked at companies such as Charoen Pokphand Foods in Thailand and Indofood in Indonesia. CP Foods trades at around 13.5 times next year’s earnings, while Indofood is quoted at about 12.6 times, according to Bloomberg data.
More than 30 investors participated in the transaction, but the majority of the demand came from domestic accounts, the source said.
For the nine months to September of this year, San Miguel Pure Foods generated Ps69.4 billion in revenue, up from Ps64.3 billion during the same period in 2011.
Maybank ATR Kim Eng, Standard Chartered and UBS were joint global coordinators and bookrunners for the deal.
