JG Summit raises $200m from top-up placement

The Philippine conglomerate defied rocky market conditions and raised $200 million in the top-up placement. Over 70 lines participated in the book.
Manila, the Philippines
Manila, the Philippines

JG Summit, the Philippine conglomerate, raised $200 million from an accelerated top-up in shares on Wednesday night at the bottom of the initial price range.

The deal consisted of 145.7 million primary shares offered at a price range of P61 to P64 per unit, representing a 12.7% to 8.4% discount to the January 20 closing price of P69.90 per share, according to a term sheet seen by FinanceAsia.

Strong share price performance last year ensured JG Summit experienced strong demand, particularly from domestic investors.

The top five positions accounted for 50% of the deal, and there were over 70 lines in the final book, a mix of hedge funds and long-only institutional investors, according to a banker close to the deal.

Shares finally priced at P61 per unit, the bottom of the range, which allowed JG Summit to raise $200 million under the joint leads of CLSA and UBS. At P61 per share, the shares were sold at a 12.7% discount to Tuesday’s close..

The accelerated top-up comes after JG Summit posted strong share price performance in 2014. It rose 69% last year and shares are up 6% so far up to January 21, reasonably in line with the Philippines Stock Index, which is up 3.4% year-to-date. The conglomerate, which has a variety of businesses across food and beverage, real estate, telecommunications and power distribution, is trading at 29.32 times 2014 earnings, according to Bloomberg data.

A number of blue chip Philippine stocks have performed well so far in 2015. SM Prime, the country’s largest shopping mall provider, and property developer Ayala Land have enjoyed slight gains in the past few days as depressed oil prices and the weak peso are favourable to retail leasing, one analyst noted in a Bloomberg report.

Last week crude oil prices plummeted to five-year lows of $46 a barrel, down from more than $100 a barrel last July. This has prompted a number of companies to scrap projects not considered viable at current prices. Royal Dutch Shell and Qatar Petroleum have halted plans to build a $6.5 billion petrochemical plant.

Volatile markets generally have kept issuance to a bare minimum so far this year. The Philippines is one of the few bright spots however. “In the current risk-off scenario, the Philippines has become one of the markets to own because the economy remains strong and buoyant and it benefits from lower oil prices,” Rico Gomez, vice-president of Rizal Bank, said in a research note.

Indeed, issuance in the Philippines so far this year is already up compared to the same prior-year period. Some $412 million has been raised thus far in equity capital markets up to January 21, compared with no deals last year, according to Dealogic data.

Deals this year include Ayala Land’s $350 million top-up placement on January 10 and First Gen Corp’s $57 million follow-on earlier this week. UBS was the sole lead on Ayala Land’s placement, while Deutsche Bank handled the First Gen Corp transaction.

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