Crown Asia undertakes maiden offer

CROWN Asia Chemicals Corp., which manufactures plastic compounds and pipes, will debut on the Philippine Stock Exchange today, in an event that also marks the first initial public offering (IPO) for 2015.

The company last week raised P222.78 million from an IPO that was met with heavy demand, one of its underwriters said. It raised the funds for business expansion and to pay down debts.

Crown Asia, whose products are mainly used in the construction and telecommunications business, was established in 1990. It is also listing at a robust time for the Philippine construction sector.

The company’s operations have so far proved profitable, information on its prospectus showed.

Crown Asia posted a 6-percent increase in last year’s revenues to P850.74 million, and a net income of P65.38 million—up 31.4 percent.

Crown Asia’s IPO involved the sale of 158 million new shares at P1.41 each.

This will be equivalent to a 25.05-percent stake in the company, indicating an initial market value of about P890 million, its prospectus showed.

The company, headed by the Perez and Villanueva families, will retain about 74.95 percent of Crown Asia after the IPO.

As noted, the offering was met with strong demand, partly due to its relatively small size and pricing, said Manny Ocampo, of Abacus Capital & Investment Corp.

In an interview last week, Ocampo said the IPO was oversubscribed more than three times for the underwriter portion, and 3.5 times for the allocation set aside for local “small” investors.

Crown Asia said P66.2 million of the IPO proceeds would go to the construction of a new PP-R and HDPE manufacturing plant, and another P43.8 million would be used to retire debt.

It said another P25 million would be spent for the modernization of existing compounds and pipes plants, while P68.9 million would be set aside as working capital.

A little over half, or 58.1 percent, of Crown Asia’s compounds are sold in the Philippines, with the rest going to the export market, the company said.

Its pipes are distributed mainly through hardware dealers and wholesalers. Crown Asia said 100 percent of its pipe products are distributed in the Philippines. Miguel R. Camus