GT Capital IPO

GT Capital launches Philippine IPO of up to $449 million

The holding company of the influential Ty family is poised to become the first Philippine listing this year and the largest in more than a year.

GT Capital yesterday kicked off the international roadshow and bookbuilding for its initial public offering, which is the first on the Philippine Stock Exchange this year.

The conglomerate is the holding company of the Ty family’s businesses, which range from banking and real estate development to power generation, auto manufacturing and life insurance. The portfolio gives it a diversified exposure to the growth of domestic consumption and the broader Philippine economy and makes it an attractive investment target for international funds looking for ways to play this growth. The holdings include several listed units, such as blue-chip Metropolitan Bank and Trust (MBT).

GT Capital has set a price range that will allow it to raise between Ps17.1 billion and Ps19.4 billion ($396 million to $449 million). In dollar terms, this will make it the biggest IPO in the Philippines since Cebu Air raised $611 million in October 2010, according to Dealogic. It should also ensure that the stock will be reasonably liquid — something that cannot be taken for granted in the Philippines.

The deal comprises 41.2 million shares, of which 80% are new. Of the total, 70% is targeted at international investors, while the remaining 30% will be set aside for the domestic tranche.

The shares are offered at a price ranging from Ps415 to Ps470 each. The company’s initial filing had an offer price target of up to Ps520 per share.

The base deal accounts for up to 26.1% the enlarged share capital. There is also a 15% greenshoe that could increase the total proceeds to as much as $516 million if exercised in full.

GT Capital has secured a good mix of high-quality names as anchor investors, a source said, adding that they will take up around 25% of the base deal. The anchors include long-only regional players, as well as some global US accounts. Domestic institutions will go into the domestic part of the book.

The price range values the company at a 2012 price-to-earnings (P/E) ratio of between 11.9 times and 13.4 times, the source said. That places it at a discount to the Philippine conglomerate sector average of 16.5 times this year’s earnings. There are a number of listed conglomerates in the Philippines, including Ayala and SM Investments, but none of these companies has the exact same mix of assets as GT Capital, the source noted.

Among its pillar businesses, GT Capital owns a 25.1% stake in MBT, a universal bank that offers corporate and commercial banking products and services in the Philippines. MBT, which has been listed on the Philippine stock exchange since 1981, was the second largest Philippine bank by market capitalisation (about $3.3 billion) as of the end of December last year.

The conglomerate is involved in real estate development through its 80% interest in fully consolidated subsidiary Federal Land (Fed Land), which develops residential and commercial projects. In 2011, Fed Land made reservation sales of 2,168 residential units with a total sales value of Ps9.1 billion, an increase of 114% compared to 2010 in terms of value.

GT Capital plans to use part of the IPO proceeds to finance several prime projects of Fed Land in metro Manila and Cebu, and to buy the remaining 20% stake in Fed Land that is currently held by other Ty family holding companies. The move will make Fed Land a wholly-owned subsidiary and is in line with the group’s plans to consolidate all non-bank investments into GT Capital.

With the proceeds, it also plans to exercise an option to buy 4.6% of independent power producer Global Business Power, and to repay existing debt.

The offering comes as the Philippine stock market continues to perform strongly. The benchmark PSEi index is now up more than 15% this year, building on the 4% gain it booked in 2011.

The source said that there is no reason not to launch the deal now, given that the country has good macro dynamics in the economy. The market also seems to have stabilised and the response to the investor education has been good.

According to the current timetable, the management roadshow and international bookbuilding will end on April 2, with the pricing expected at the end of US trading that same day. The domestic offering period will run from April 10 to April 13. The listing is scheduled for April 20. The relatively long timeline is due to the Easter holidays in early April.

UBS is the sole global coordinator and international bookrunner, while First Metro Investment Corp will handle the domestic portion of the deal.

Last year, GT Capital generated revenues of Ps8 billion, which was up from Ps6.3 billion in 2010 and almost double the Ps4.3 billion that it recorded in 2009, according to a prospectus published this week. Net profit improved to Ps3.5 billion in 2011 from Ps3.1 billion the previous year and Ps2.2 billion in 2009. Fed Land was the largest contributor to revenues last year with Ps3.4 billion, while MBT contributed Ps2.8 billion.

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