Cosco Capital, the conglomerate led by grocery and logistics magnate Lucio Co, is planning a follow-on equity offering worth about $500 million to widen its public float and boost funds for expansion.
Financial market intelligence provider IFR, a Thomson Reuters publication, reported the said planned shares offering, citing unnamed sources. IFR also reported that Deutsche Bank and JPMorgan have been mandated to manage the offering.
IFR also reported out of Hong Kong that the proposed deal would involve $300 million worth of new shares in a primary offering. The rest will be secondary shares, which means that the Cos may pare down their stake in the holding firm.
The company will be needing funds for the expansion of its real estate portfolio, including investment in Puregold-anchored property development, distribution centers and oil storage facilities (P6 billion); refinancing (P9 billion); expansion into non-food specialty retail (P2 billion) and working capital (P1 billion).
The market has been expecting the follow-on offering—or a re-IPO (initial public offering)—since Co restructured what was once a purely oil, gas and mining play, Alcorn Gold Resources Corp. (APM), to become the holding firm for the bulk of his businesses. This was similar to how taipan Lucio Tan transformed his liquor company, Tanduay Holdings into LTG Inc., a holding firm for the group which also held recently a successful re-IPO involving $970 million.
In the case of Cosco, the new assets injected by Co into this company consisted of the following: a 51-percent stake in flagship grocery chain Puregold Price Club Inc., a portfolio of liquor distribution companies, a portfolio of commercial real estate companies and an oil storage business (Pure Petroleum Corp.).
Puregold is the country’s second largest retailer in the Philippines and the stiffest competitor of tycoon Henry Sy’s SM group.
In liquor distribution, the group is the dominant player in premium wine and liquor market with exclusive rights to leading brands. This business is expected to grow by 43 percent this year, based on Cosco’s briefing materials. Its portfolio currently has 98 brands.
In real estate, its commercial centers posted an average occupancy rate of 96 percent in the last three years, backed by the retail business.