Gokongwei unit set for record IPO

The Gokongwei group’s retail unit Robinsons Retail Holdings Inc. has obtained the approval of the Securities and Exchange Commission to raise as much as P42 billion from what may be the largest initial public offering seen by the local stock market.

Robinsons Retail—the country’s second largest multiformat retailer—may now offer as many as 484.75 million new primary shares at a maximum price of P86.64 a share. The offer consists of up to 461.9 million in base offer and 22.85 million for the overallotment option, according to SEC documents.

At its maximum IPO offer size and price, Robinsons Retail can make history at the local stock market. The largest IPOs (excluding follow-on offerings) completed in the country so far were those conducted by SM Investments Corp. and budget carrier operator Cebu Air Inc. SMIC raised P28.8 billion in 2005, while Cebu Air saw P23.33 billion in 2010. Resorts World Manila operator Travellers International Hotel Group Inc. earlier obtained approval from the Philippine Stock Exchange to pursue an IPO of about the same size of P42 billion, but this has been put on hold in light of volatile global market conditions.

The stock debut will bring to public hands as much as 35 percent of the Gokongwei unit, which has 33 years of retailing experience. Since opening the first Robinsons department store in Manila in 1980, it has successfully expanded into five other business segments: It entered the supermarket business in 1985; the do-it-yourself hardware/home improvement business in 1994, the convenience store and specialty store business in 2000 and the drugstore trade in 2012.

Robinsons Retail is led by president and chief operating officer Robina Gokongwei-Pe and chair John Gokongwei. As of end-June, it had a portfolio of 940 stores nationwide, with 428 stores in Metro Manila, 423 in other parts of Luzon, 55 in the Visayas and 34 in Mindanao for a total net selling space of about 545,256 square meters.

Deutsche Bank, JP Morgan and UBS are the joint global coordinators, bookrunners and international lead managers for this offering, while Maybank ATR Kim Eng Capital Partners is the sole domestic lead underwriter.

Robinsons Retail intends to use bulk of the net proceeds (86 percent) to partially fund capital expenditures in connection with the establishment of new stores. The remaining proceeds will be used to fund renovation of existing stores (P2.89 billion) and repayment of all outstanding bank loans (P1.71 billion).

The company intends to maintain an annual cash dividend payout ratio of 20 percent of its audited consolidated net income for the preceding fiscal year.