Biz Buzz: Book running and front running? | Inquirer Business

Biz Buzz: Book running and front running?

/ 10:28 PM May 08, 2011

NOW it can be told.

The massive selldown that wiped out a few billion pesos worth of San Miguel Corp.’s stock was precipitated by a local stockbroker who was—irony of ironies—part of the group tasked by the firm to market its $970-million issue to investors.


According to multiple market sources, the selldown started in early April, a few days before the Holy Week break last month and soon after it became clear that the conglomerate would have to price its equity sale lower due to “difficult market conditions” (but long before the P110-per-share selling price was made public).

Once it was discovered that this local broker was leading the selloff, furious San Miguel officials telephoned them to demand an explanation. Their answer? They were merely executing sell orders on behalf of their hedge fund clients.


To this, San Miguel officials wondered whether these clients could have been tipped off about the issue price, given the broker’s knowledge of the matter.

San Miguel officials also think that some unscrupulous parties took advantage of advance information to short the company’s stock. These were the very same people who raised a howl after the conglomerate—faced with heavy speculative selling—volunteered to have trading on its shares suspended (a big headache for short sellers who needed to cover their open positions by buying at lower prices).

So… book running and front running? Hmmm. Needless to say, it is probably safe to assume that they won’t be getting any business from San Miguel anytime soon.—Daxim L. Lucas

Golden foothold

THE purchase by Philex Mining of a 5-percent stake in Lepanto Consolidated Mining from institutional investors last week is widely seen as the start of the First Pacific group’s accumulation of other local mining interests.

No less than Manuel Pangilinan’s principal—First Pac chairman Antoni Salim—is said to be gung-ho on local mining, believing this could be the next platform for growth in the Philippines, alongside infrastructure (while the maturing telco business remains a stable cash cow).

Some naughty pundits pointed out that the purchase of the Lepanto block from BPI Asset Management and Trust Group (BPI-AMTG) and First Metro Investment Corp. was even announced by Philex on the same day that San Miguel Corp. crossed its secondary shares on the stock market, in an attempt to steal the thunder from First Pacific’s rival.


The expectation, of course, is that MVP won’t stop at 5 percent. The discussion with Lepanto and Manila Mining’s big boss, Felipe Yap, has been going on and off and on again for a few years now, and the ultimate goal (like how First Pac built up its stake in Philex) is to eventually become either the majority voting block or a significant minority.

This could be done by buying more shares from Yap who had said he was “not getting any younger” or from Lepanto itself which, after all, has the flexibility (via a waiver of preemptive rights by existing shareholders) to sell up to 20 percent in new shares to a new investor.

BPI-AMTG and FMIC also still have remaining shares in Lepanto, which we estimate at close to 20 percent jointly, but any further selldown (or sellout) may have to wait depending on how juicy a deal Yap could extract from MVP.

Meanwhile, aside from a separate joint-venture deal with Yap involving Manila Mining’s Kalayaan mine, which is contiguous with Philex’s Silangan (formerly Boyongan) property, MVP is believed to be looking for more mining assets, and some pundits have begun to second-guess which the next potential listed candidate is.—Doris C. Dumlao

Vegas in the Philippines

INTEREST in the proposed privatization of Philippine Amusement and Gaming Corp. (Pagcor), or at least its gaming operations, has reached far beyond Philippine shores.

A source privy to the matter told Biz Buzz that representatives of UBS, a global financial services company based in Switzerland, were to meet with certain public officials early this month for a presentation.

Why? UBS is said to be interested in underwriting the privatization.

Proponents are envisioning that selling Pagcor’s commercial half—while keeping the regulatory functions under government—could work for the Philippines the way the US developed Las Vegas as its gaming tourism destination.

Supporters of the privatization are crossing their fingers that gaming magnates behind the likes of Wynn, Sands and MGM hotel-casinos would participate as strategic partners to interested Philippine companies.

And where did the presentation take place? Why, Las Vegas, of course.—Riza Olchondra

Rizal’s legacy at SEC

THE new Securities and Exchange Commission chairperson is yet another woman and another lawyer from the University of the Philippines. But former Accra lawyer Teresita Herbosa has another claim to fame, being a direct descendant of the country’s national hero Jose Rizal.

Her great grandma is Lucia Rizal Mercado Herbosa, to whom the martyred hero gave that lamp where he had hidden the famous Mi Ultimo Adios manuscript the night before his execution via firing squad.

Meanwhile, the SEC is technically only Herbosa’s second employer (apart from a short secretarial stint before becoming a lawyer), albeit her long career at Accra had allowed her to specialize in many areas such as telecommunications, family law, land and air transportation, contract law, government contracts, public bidding and award, constitutional and even environment law.

The appointment of Herbosa—who has been described as a “stern, fair and no-nonsense corporate lawyer” by those who know her—coincides with the upcoming 150th birth anniversary of her great grandfather Jose.

Recognizing the weight of responsibility arising from her storied pedigree, Herbosa has vowed to use the experience she gained from private practice to contribute to better public governance and “serve the people with honesty and integrity.”—Doris C. Dumlao

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