Pilipinas Shell’s P19.5-B IPO ‘well covered’ ahead of offer period


Pilipinas Shell’s P19.5 billion initial share sale to the public is now “well covered” even before the offer period starts, thanks to strong demand from local and foreign investors, a banker said Tuesday.

The much-delayed offering is “already well covered, the whole deal,” Reginaldo Cariaso, senior managing director at BPI Capital, told reporters. “In fact, if we don’t even sell a single share,” it is “already covered.”

Even if the target size has so far been covered, small investors can still buy during the offer period from October 19 to 25, he said.

“But because [there are shares]reserved for the trading participants and LSIs [local small investors], they can still invest during the retail offer period,” he said.

BPI Capital is the domestic lead underwriter and domestic bookrunner of the transaction, the second-biggest IPO this year after cement maker Cemex Philippines’ P25.13 billion sale.

The company is “trying to get as many local retail investors as possible,” outgoing Pilipinas Shell president and country chair Edgar Chua said at the same presser. This is in line with the thrust of both the PSE and the SEC to give Filipinos, especially small investors, a chance to participate in the local stock market.

Pilipinas Shell is offering 291 million shares composed of 275 million primary and secondary shares as base offer, and 16 million secondary shares in case of an oversubscription. The IPO shares are equivalent to 17.31 percent public float in the company.

Despite the volatile local shares market, foreign investors are unperturbed, said Cariaso.

“The foreign investors’ interest is very strong. We did the international side already [before marketing for local retail investors]. They already came in,” Cariaso said.

Of the total expected proceeds from the IPO, only 10 percent or P1.95 billion will go to Pilipinas Shell, while the bulk or 90 percent will go to selling minority shareholders : Shell Overseas Investments BV, The Insular Life Assurance Company Ltd., and Spathodea Campanulata Inc.

The 16 million oversubscription option was also guaranteed by the selling minority shareholders
J.P. Morgan was appointed global and international bookrunner of the offer, while BPI Capital serves as the domestic lead underwriter and domestic bookrunner, and Rothschild was tapped as the financial adviser.

The Shell IPO is in compliance with the Oil Deregulation Law passed in 1998, requiring oil refiners to list at least 10 percent of their shares in the local bourse.

Chua explained the Shell IPO is already more than 10 years delayed, citing the Asian financial crisis, unfavorable market condition, low oil prices, regulatory issues, and the decision whether to keep the refinery or not in the past years.

Pilipinas Shell has the second largest oil refiner in the country next to Petron Corp. in terms of volume sold, having nearly a quarter of the local retail fuel market.

As of end-June, the company is operating 996 retail service stations nationwide.

Meanwhile, its incoming president and country manager Cesar Romero said the company aims to have 1,200 service stations nationwide in the next few years, requiring $10 million to $20 million in investments.

Shell owns an oil refinery in Batangas—the one of two refineries in the country—producing 110,000 barrel of fuel per day. It has recently undergone an upgrade to deliver Euro 4 compliant fuels.

The shares, priced at P67 apiece, will debut in the PSE on November 3.


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