The founder of Philippine conglomerate JG Summit raised $250 million by selling some of his shares after the market closed on Wednesday, adding to the spring's late bloom of Southeast Asian equity offerings.
John Gokongwei, the second-richest person in the Philippines, offered roughly 60% of his direct share holding in JG Summit for sale and met with such strong demand that the deal was increased, albeit at the lower end of the indicative price range.
The block trade is the fourth follow-on offering in the region in less than a month, a purple patch that stands in contrast to the slow market conditions of the previous 12-month period.
Norwegian offshore drilling contractor Seadrill gave the market a head-start by completing $198 million clean-up sale of shares in Malaysia’s SapuraKencana Petroleum in late April. That was followed by a $75 million secondary share sale in Malaysian telecom operator Digi.com and CVC’s $227 million clean-up sale of Indonesia’s Matahari Department Store.
Singapore has also hosted the $470 initial public offering of Manulife US Reit, which could soon be followed by the $600 million listing of Frasers Logistics & Industrial Trust.
An investment banker familiar with the situation said there are still a number of transactions in the pipeline that could be done before the summer break, without giving further details.
Details
John Gokongwei's JG Summit shares were offered at a price range of P82.10 to P85.75 per share when the book opened. That would have raised a minimum of P9.8 billion ($210 million).
But with confidence in the Philippines economy growing and political uncertainty receding, the trade was multiple-times covered, according to the banker familiar with the situation. Sole bookrunner UBS was consequently able to increase the deal size by 19% to $250 million.
JG Summit shares have risen 10.4% in the 12 trading days since the May 9 presidential election and were one of the country's top large-cap gainers.
Similar to previous equity deals, though, investors showed sensitivity to pricing and therefore the final price was settled at the bottom-end of P82.10, representing a 10% discount to the stock’s Wednesday close.
Final book included over 50 lines and allocation has been skewed towards the top accounts.
As a result of the share sale, John Gokongwei’s share holding has been reduced to around 60 million shares, or 0.5% of JG Summit’s outstanding capital. However, the founding Gokongwei family still maintains a controlling stake of around 40% in the company, including 27.88% held through the Gokongwei Brothers Foundation.
89-year old John Gokongwei is gradually retiring from the business empire he founded 59 years ago. His brother James Go and his son Lance Gokongwei are expected to step up to run the conglomerate, which includes food and beverage, banking, hotels, real estate, and telecommunication interests.
JG Summit is the parent of a number of public companies in the Philippines, including Cebu Air, Universal Robina, and Robinsons Land.
