Puregold gets SEC nod to undertake P10.8-B IPO

The Securities and Exchange Commission has approved a P10.8-billion stock market debut planned before year’s end by Chinese-Filipino businessman Lucio Co’s grocery chain Puregold Price Club Inc., the country’s second-biggest retailer.

Based on a revised prospectus approved by the SEC, Puregold plans to undertake an initial public offering of up to 600 million common shares at a price of up to P18 a share, potentially ceding to public hands 34.5 percent of its outstanding stock after the offering.

Puregold aims to go public by end-September or October depending on a final clearance from the Philippine Stock Exchange, one of the underwriters said Friday. The earlier plan was to undertake the IPO last March but this was delayed by unfavorable stock market conditions earlier this year. Recently, however, the local stock market index has climbed to new highs and shown resilience despite the economic woes in the United States and Europe.

Of the total offering, up to 500 million will be new common shares while up to 100 million will be secondary shares to be offered by the Co family.

Total proceeds to be raised by Puregold will amount to as much as P9 billion while the selling shareholders—Lucio Co, Susan Co, Ferdinand Vincent Co, Pamela Justine Co and Camille Clarisse Co—will generate up to P1.8 billion from the secondary share sale. Puregold intends to use most of the proceeds for capital expenditures required for store network expansion while the remainder will be for debt refinancing.

HSBC and UBS were mandated to be the international lead managers while BDO Capital and Investment Corp. and First Metro Investment Corp. would serve as domestic lead underwriters. Evercore Partners was named financial adviser.

Up to 70 percent of the equity sale was targeted to be sold by the international lead managers to the overseas market outside the United States. The remaining 30 percent will be earmarked for PSE trading participants and local retail investors.

BDO president Eduardo Francisco said that assuming the PSE would approve the offering next month, Puregold would try to conduct the share sale by end-September to October.

Based on the maximum offering price of P18, Puregold will have a post-IPO market capitalization of P36 billion.

Asked why the maximum indicative price for the IPO was raised from P16 during the first prospectus filed by Puregold, Francisco said it was due to “better company results.”

The prospectus showed that in 2010, Puregold grew its net income by 288 percent to P510.4 million from a year ago on the back of a 20.7-percent growth in net sales to P29.1 billion. In the first six months of this year, net profit was up 269 percent at P782.8 million, fueled by a 41-percent jump in net sales to P17.3 billion.

As of July 22, Puregold has 72 stores in 20 cities and 22 municipalities in Metro Manila and Luzon, growing significantly from a single-store operation in 1998. Of its total store network, 46 were hypermarkets (Puregold Price Club) with a total net selling space of 154,927 square meters, 19 were supermarkets (Puregold Junior) with 18,002 sqm of retail space and seven were discount stores (Puregold Extra) with net selling space of 3,027 sqm.

The company plans to open 28 stores for the remainder of the year, expanding its retail space by 52,494 sqm.