Robinsons Retail Holdings, an operator of more than 900 retail outlets in the Philippines, will raise Ps26.79 billion ($621 million) from its initial public offering after fixing the offer price slightly above the bottom of the indicated range at Ps58 per share.
The company, which is controlled by the Gokongwei family that is also the controlling shareholder of conglomerate JG Summit, food and beverage company Universal Robina and property developer Robinsons Land, initially offered the shares at a price between Ps55 and Ps66 apiece.
The low-end pricing came despite the fact that the international tranche, according to sources, was more than four times subscribed and that the order book was said to be very high quality.
One source said there were sufficient orders to fix the price at a higher level but doing so would have meant letting go of large orders from 10 to 12 good quality names. A second source said investors showed quite a lot of “price discipline”, suggesting that they were unwilling to pay too much.
A the top end of the price range, Robinsons Retail was valued almost on a par with supermarket and hypermarket chain operator Puregold Price Club and at a premium to SM Investments, which is the largest operator of shopping malls and department stores in the Philippines.
As of Thursday, Puregold was quoted at a 2014 price-to-earnings multiple of 25.8 times, while SM Investments, which is also involved in non-retail businesses such as property development, hotels and banking, was quoted at 20.6 times, according to Bloomberg data.
Robinsons Retail was offered at a 2014 P/E multiple of 20 to 24 times and the final IPO price valued it at 21 times.
Even at Ps58 per share, this is the largest IPO in the Philippines in US dollar terms, eclipsing Cebu Air’s Ps26.55 billion ($611 million) offering in October 2010. However, in local currency terms it still ranks behind SM Investments Corp’s Ps28.75 billion IPO in 2005. Due to the lower exchange rate at the time, SM Investments only raised $523 million in US dollar terms.
And earlier this year, LT Group, a retail consumption-focused conglomerate controlled by the family of local tycoon Lucio Tan, raised Ps32.8 billion ($792 million) from a fully marketed top-up placement that was essentially a re-IPO given that the deal came on the back of a sizeable asset injection that changed the company’s business focus. LT Group also had a limited free-float prior to the transaction.
Looking further afield, Robinsons Retail is the fifth largest new listing in Asia this year after four other Southeast Asian deals, and the second biggest in the retail sector globally so far in 2013 behind Mexico’s Grupo Sanborns SAB de CV’s $831 million IPO in February, according to Dealogic.
The deal brings the value of new listings in the Philippines this year to about $1.3 billion, which is two-thirds more than what was raised in 2012 as a whole, Dealogic data show. It also helps to push the equity capital markets (ECM) volume in Southeast Asia so far this year to $28.6 billion — the highest year-to-date level on record.
The Robinsons Retail deal had no cornerstone investors but, to ensure a successful transaction, the bookrunners had drummed up a number of anchor investors and other shadow orders before launch to the extent that the deal was almost fully covered when the international order books opened on October 14. On the back of that, they then saw demand from a variety of long-only funds, momentum deal players, hedge funds and high-net-worth individuals.
Sources said more than 130 international accounts participated in the IPO overall and about 60% of the shares set aside for international investors went to long-only funds. Compared to a typical Asian IPO, the demand out of Europe was particularly strong (about 20% of the total), while Asia accounted for about 60% and the US for another 20%, they said.
The company, which operates supermarkets, department stores, convenience stores and other specialty retail outlets across the Philippines, will sell approximately 461.9 million new shares with 70% going to international investors.
The remaining 30% will be sold to domestic institutions and retail investors in a separate offering that will run from October 29 to November 5. The trading debut is scheduled for November 11.
The deal, which accounts for 33.5% of the enlarged share capital, comes with a 4.9% greenshoe that could increase the total proceeds to about $651 million. The Gokongwei family’s stake will fall from 100% to 66.5% after the IPO, or to 65% if the greenshoe is exercised in full.
Robinsons Retail’s portfolio has increased to 940 stores at present from 631 at the end of 2011 and its net profit has increased at a compound annual growth rate of 71.7% in the three years to December 2012, while revenues have grown by about 13.4% each year.
It will use about 86% of the IPO proceeds to expand its network of stores even further, 7% to renovate existing stores and about 4% to repay bank loans. The remaining 2% will go towards other corporate purposes, according to a company presentation.
Deutsche Bank, JP Morgan and UBS are joint global coordinators, while Maybank ATR Kim Eng is acting as the domestic underwriter.
