E-Malt.com News article: Philippines: Investors gobble up San Miguel Brewery IPO

The initial public offering (IPO) of stock of San Miguel Brewery Inc., the domestic beer unit of the beverage and food group San Miguel Corp., has attracted substantial interest, with the local tranche oversubscribed a day before the close of subscriptions, one of two domestic underwriters said, according to Reuters, May 6.

The local tranche accounts for 30 percent of the offering, with the rest available to international investors. The overseas offer, which closed on April 24, was around 1.5 times covered after being priced at the bottom of the range, the sources said.

"It's oversubscribed already, that is why we at BDO have to cut down some of our customers already," Ed Francisco, executive vice president at underwriter BDO Capital Investment Corp., told Reuters.

"The fact that you are cutting down, it is a good sign. That means the issue is really doing well even if the market is not doing well."

San Miguel Brewery, considered San Miguel Corp/’s crown jewel, has priced the offer at P8.00 per share, the low end of a P8.00-P11.00 range. The shares will be listed on May 12.

Only five percent of the stock is being put on sale, giving the company P6.16 billion in proceeds.

At the start of the year, San Miguel Brewery was gearing up to be the Philippines' biggest-ever IPO with maximum proceeds of $600 million-plus, overshadowing conglomerate SM Investments' record $530-million offer in 2005.

But turbulent market conditions and investor complaints that the offer was too expensive forced San Miguel Corp. to shrink twice the price range from an original P9.50-P16.30 per share and halve size of the offer.

The beer business accounts for around 40 percent of San Miguel group operating profit. In the first quarter, it posted a 37-percent increase in net income to P2.5 billion on net sales up 13 percent.

The bulk of the IPO proceeds will be used to pay off San Miguel Corp.’s debts.

Citigroup and ATR Kim-Eng Capital Partners are joint global coordinators in the San Miguel Brewery IPO. ATR Kim-Eng Capital and BDO Capital are joint domestic underwriters.

San Miguel's Class B shares, open to all investors, closed unchanged at P49.00 on Monday while its Class A shares, reserved for locals, were up P0.50 at P46.50.

The overall index was up 1.1 percent.


07 May, 2008