The Gokongwei group sold a $125 million stake in its flagship Philippines conglomerate JG Summit on Thursday night. The deal follows on the heels of a similar placement in Petron just a few weeks ago, as the country’s stock market continues to show solid performance.
The main stock index in the Philippines has gained more than 8% so far this year — on top of a 4% rise last year. By contrast, Hong Kong is up nearly 13% to date, but only after losing about 20% in 2011.
Affiliates of JG Summit (as well as CEO John Go) sold 215 million shares in the company at a fixed price of Ps25, which translated into a 12.3% discount compared to Thursday’s close of Ps28.50. The final sale size represented about 3% of JG Summit’s outstanding stock. Based on the average daily turnover during the past three months, the deal accounted for about 240 days of trading volume.
The sale is aimed at widening JG Summit’s shareholder base and comes in response to strong demand for the company’s stock, according to the statement. After the transaction, JG Summit’s shares dropped more than 11% on Friday to close at Ps25.25.
The company initially planned to sell 129 million shares, or 1.9% of the company, for $75 million, but increased the size of the deal to $125 million after demand reached close to $225 million, the company said in a statement to the Philippine Stock Exchange on Friday.
A source said that the deal size was expanded after the book was covered in 30 minutes. More than 40 investors took part in the deal.
It was anchored by a global fund and saw good engagement from Philippines domestic institutions, regional long-only investors as well as some accounts from Europe and the US, the source noted. About 60% of shares sold went to foreign investors.
Similarly, Petron’s block sale in late January was also done at a fixed price and was all but covered at launch.
“It’s certainly an attractive market at the moment,” the source said. “The Philippines has got a good domestic macro story, which I think is a bit more immune to global shock.”
JG Summit provides a good opportunity to take advantage of that domestic growth story thanks to a portfolio of businesses that focus on local consumption, the person also said. Its major holdings include airline Cebu Pacific, as well as investments in banking, food manufacturing, property and telecommunications.
UBS was the sole bookrunner for the deal.