Screen grab from topfrontier.com.ph
MANILA, Philippines — Top Frontier Investment Holdings Inc., San Miguel Corp.’s controlling stockholder, plans to invest in mineral processing and conduct an initial public offering (IPO) once market conditions turn favorable, possibly within this year.
Shares of Top Frontier, which listed by way of introduction or without any IPO on Monday, slid by 44.41 percent to close at P98.95 per share on inaugural trading as investors took their cue from the lower pricing of the main investee company, SMC.
Shares of SMC, on the other hand, closed 3.25 percent lower at P58.05 per share.
“Most of them are thinking it’s like one is to one so bid price is immediately low. They haven’t realized that they got Top Frontier shares at one to 10 so the value is really P178 (per share) based on the valuation of San Miguel,” Ramon S. Ang, president of both SMC and Top Frontier, told reporters after the listing ceremonies.
“So we need to stabilize first before we move on to the second phase,” Ang said, referring to the IPO after this listing by introduction.
Top Frontier started trading on Monday under the ticker TFHI. It listed at an initial price of P178 per share, giving it a market capitalization of P87.25 billion. But with the decline in shares, market capitalization slipped to P59.25 billion.
SMC earlier distributed to its common shareholders 240.196 million shares in Top Frontier – equivalent to its 49 percent stake – as property dividend. Shareholders of SMC got one share of Top Frontier for every 10 existing shares in SMC.
“For the meantime, what we need is to give a little bit more time to investors who have gotten the shares,” Ang said.
“At some point, Top frontier needs to sell shares to be able to pay off some obligations,” he said.
Asked whether it’s possible for Top Frontier to tap the capital market this year, Ang said: “If the market is good, we will do it within this year.”
But Ang said Top Frontier would also sell some shares later on when it had identified the need for fresh investments. For instance, the holding firm is looking at the acquisition of new mining assets.
“We have zeroed into at least three foreign investments now. We’re now doing due diligence,” Ang said, noting that one of these potential mining firms had started drilling. “Once we’re sure that the reserves are good, then we can proceed,” he said.
Aside from its controlling stake in SMC, Top Frontier is interested in mining gold, copper, nickel and chromite.
“So we’ll pursue all those. There as so many opportunities not only in Philippines but also within the region,” he said.
As a strategy, he said Top Frontier’s potential mining ventures would include an investment in a process plant.
“In all our mining investments, our idea is to just operate on total processing. We don’t plan to export raw materials like what other people are exporting,” Ang said.
As such, he said Top Frontier has started conducting a due diligence on potential investments in gold, copper and nickel mining to determine the type of chemicals and metals.
“You can’t go and buy a plant without knowing the exact composition and quality of materials. When you get all these, that’s the only time you’ll get the plant.”
The distribution of shares in Top Frontier intends to address cross-ownership issues. With this scheme, SMC will no longer own shares in Top Frontier although the latter will still be SMC’s controlling stockholder.
As of the end of September, Top Frontier is the lead shareholder of SMC controlling 56.6 percent of direct shares and another 9.49 percent in indirect shares lodged with Philippine Depository and Trust Corp.