Robinsons Retail to proceed with public stock offering

The Gokongwei group’s retail unit Robinsons Retail Holdings Inc. plans to proceed with its initial public offering soon but aim for a lower size of $500 million to factor in recent market volatility.

Capital market publication International Finance Review, a unit of Thomson Reuters, reported on Friday that Robinsons Retail was bound to start “pre-marketing” for an IPO worth $500 million in the second week of October.

Another source confirmed the retailer’s plan to brave the equities market, saying that the Gokongweis have started “doing the rounds” to introduce Robinsons Retail to institutional investors.

This shows a growing trend of corporations rekindling their capital-raising plans but aiming for a smaller offering size to take advantage of the window of opportunity provided by the US Federal Reserve’s deferral of monetary stimulus tapering. Earlier, it was reported that Travellers International Hotel Group has likewise revived its IPO plan but is looking at a smaller size of $450 million to $480 million.

Both Robinsons Retail and Travellers were aiming for an IPO size of as much as P42 billion ($970 million) previously, which would have made history as the biggest stock debut in the local equities market.

Robinsons Retail, the country’s second-biggest multiformat retailer, earlier obtained approval from the Securities and Exchange Commission to issue as much as 484.75 million new primary shares at a maximum price of P86.64 each. The offer consists of up to 461.9 million in base offer and 22.85 million for the overallotment option, based on SEC documents.

This stock debut will bring to public hands as much as 35 percent of the Gokongweis’ retail group, which has 33 years of retailing experience. Since opening the first Robinsons Department store in Manila in 1980, it has expanded into five other business segments, entering into 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 business in 2012.

Robinsons Retail is led by its 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 Visayas and 34 in Mindanao for a total net selling space of 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 and the balance will be used to fund renovation of existing stores and repayment of all outstanding bank loans.

The company had total assets of P23.65 billion in 2012. Net income attributable to equity holders of the parent company in 2012 amounted to P1.2 billion, about 2.5 times higher the level in 2011. This was on the back of P57.39 billion in net sales which went up by 19 percent year-on-year.

Earnings per share in 2012 stood at P2.89 or more than double the level of P1.16 in the previous year.