Philippine retailer SSI Group raised $166 million in an initial public offering after pricing shares at the top of the range, making it the country’s largest flotation this year.
The retailer sold 864.2 million shares at 7.50 pesos per unit, representing 26.1% of the enlarged share capital. The 7 pesos to 7.50 pesos per unit indicative price range was revised down from 12.50 pesos per share originally, and clearly resonated well with institutional investors — the institutional book was covered just hours after bankers began taking orders.
Allocations were still being finalised on Thursday morning but bankers close to the deal told FinanceAsia that the books were a good mix of both long-only institutional investors and hedge funds, although the geographic split was less diverse — the majority of the investors are located in Asia. They declined to say how many lines were in the book.
In addition to a lower price range, SSI Group’s cornerstone backing helped sway investors. Six cornerstones — Capital Research, Macquarie Funds, Government Service Insurance System, Bank of Philippine Islands Asset Management, Havenport Asset Management and York Capital — all agreed to purchase 335.6 million shares, or 39% of the base deal size, and invest a combined $56 million.
Demand allowed various members of the Tantoco family, who own the majority of the company, to offload roughly 172.8 million shares, or 20% of the total base deal. Some 80.5% of the base deal is primary. The greenshoe option represents 129.6 million shares and is entirely secondary shares.
At 7.50 pesos per share, SSI Group sold at 21 times its 2015 earnings, a discount to its main peers Robinson’s Retail and PT Mitra Adiperkasa, which are trading at 24.67 times its 2014 earnings and 29.01 times 2014 earnings, respectively.
The Philippines is one of the best performing markets in Southeast Asia this year, with the Philippines Stock Exchange up 18% year-to-date. And SSI Group, which sells 103 international brands including Prada, Gucci, Burberry, Salvatore Ferragamo, Michael Kors, Gap, Zara and Markets & Spencer, and operates convenience stores through the FamilyMart chain, remains an appealing consumer play in the Philippines.
Still, questions remain over how it will perform in the aftermarket. It’s been a horrendous couple of weeks for equities globally, which has led to billions in outflows from equity funds and poor performance of a number of recently-listed companies. Online payment company MOL Global plummeted 38% after raising $169 million in its Nasdaq IPO on October 9, while Hua Hong Semiconductor, meanwhile, dropped 5% in its market debut after raising HK$2.57 billion ($330 million) also on October 9.
The Philippines’ bourse, although still up on the year, has dropped 4% since peaking on September 24.
