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Cemex P25-B IPO starts

2.03B primary shares to be offered at P10.75/share
/ 12:22 AM July 04, 2016

CEMENT manufacturer Cemex Holdings Philippines Inc. is set to start today (Monday) a P25.1-billion initial public offering (IPO).

Cemex priced its IPO at P10.75 per share. It will offer to the public 2.03 billion primary shares with an over-allotment option of 304.95 million shares.  This will bring about 45 percent of its stock to public hands and set the company’s market capitalization at P55.85 billion upon listing.

The offering will run from July 4 to 11.  Listing on the main board of the Philippine Stock Exchange was tentatively set for July 18. Cemex will use the trading symbol “CHP.”

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At P25.1 billion, the Cemex IPO is the third largest conducted in the PSE to date. The two biggest IPOs so far  this year were those of retailer Robinsons Retail Holdings Inc. (P28.11 billion in 2013) and Sy family-led conglomerate SM Investments Corp. (P26.25 billion in 2005).

“The deal was oversubscribed even without orders from trading participants and local investors,” said Eduardo Francisco, president of BDO Capital & Investment Corp., the offering’s lead underwriter. As such, Francisco said the oversubscription option would be exercised.

It was earlier reported that some institutional investors had agreed to be the cornerstone investors for the IPO, including BlackRock Inc., Fullerton Fund Management Co. (a unit of Singaporean state investment firm Temasek) and Avanda Investment Management.

The shares of Cemex will also be offered to local small investors (LSI) as part of the retail investor program of the PSE. The LSI program requires the issuer to allocate 10 percent of its offered shares to retail investors.

In the case of Cemex, 406.6 million IPO shares were allotted for trading participants while 203.3 million shares were earmarked for the LSI program.

Citigroup Global Markets Ltd., The Hongkong and Shanghai Banking Corp.’s Singapore branch and JP Morgan Securities plc are the joint global coordinators and joint bookrunners.

“The outlook for cement is actually pretty good. [President] Duterte is planning to boost infrastructure spending. Fuel costs are pretty low so they are able to keep their margins,” said AB Capital Securities analyst Alex Tiu.

But one bit of a “turn-off” for AB Capital is that Cemex is trying to use IPO proceeds to pay debt, Tiu said.

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Cemex intends to use proceeds for repayment of $504 million in short-term loan which was incurred in connection with the acquisition of operating subsidiaries Apo Cement Corp. and Solid Cement Corp.

Tiu added that Cemex had a high free float. “So we don’t expect similar performance to Golden Haven Memorial Park (whose price doubled in two days after the IPO),” he said.

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