TAKING its cue from the market, Metro Retail Stores Group Inc. has cut the offer price of its maiden share sale from the initially announced P6.10 per share to just P3.99 each.
In a disclosure to the Philippine Stock Exchange (PSE), Metro Retail Chairman and Chief Executive Officer Frank S. Gaisano said the company had set the share price during the book building process for its planned initial public offering (IPO).
An IPO is the way private companies list at the PSE and sell their shares to the public with the aim of raising capital, say, for funding expansion plans.
Through a book building process before the actual share sale, a final price comfortable with both prospective buyers and the company is set.
“As part of the institutional book building process, we have met with a significant number of institutional investors in Hong Kong, Singapore and Manila,” Gaisano said.
“We are pleased with the high level of interest in the offering, and the subsequent participation from both domestic and international investors in the institutional tranche of our offer. Given the recent global market volatility, the positive outcome of the book building was a welcome development,” he added.
“Upon receipt of the permit to sell from the Securities and Exchange Commission (SEC), we expect to begin receiving subscriptions for the IPO that can accelerate our expansion plans.”
The cut in the offer price likewise reduces the funds the share sale is expected to generate from P6.17 billion to P4.037 billion.
The offer volume still amounts to 1.012 billion—920 million base offer shares and 92 million shares in case of over-subscription. These shares are set for public offering from November 9 to 13, and will be listed at the PSE by November 24.
According to its previous prospectus, the net proceeds after offer and listing expenses and taxes will be used for expansion of store network, building a logistics and distribution center, and working capital requirements mostly for 2016 to 2017.
BPI Capital Corp. and the Hong Kong branch of Deutsche Bank AG are the appointed joint global coordinators.
Without being dependent on IPO proceeds, the retail firm is embarking on a five-year plan that entails a budget of P10 billion to P15 billion, translating to a capital expenditure of P2 billion to P3 billion for five to 10 store openings annually.
The company is planning to open at least seven stores in 2016, post-IPO. Other than store expansion, the firm intends to build a distribution center and an in-house trucking operations in Cebu.
Originally Cebu-based, Metro Retail was established by the Gaisano family, who decided expand in Metro Manila in the early 2000s via Market! Market! in Bonifacio Global City in Taguig.
To date, the company has 45 stores, with a total net selling space of 197,873 square meters. In these stores, over 9,000 employees serve more than 250,000 shoppers a day.
The Metro Retail has two major retail formats: department stores, through its Metro Department Store brand, and supermarkets or hypermarkets, through the Metro Supermarket, Super Metro Hypermarket, and Metro Fresh ‘n Easy Neighborhood Store brands.