Metro Retail group to raise P4B via IPO

Metro Retail Stores Group, the country’s fourth largest retailer, has priced its initial public offering at P3.99 per share, firming up the size of this stock debut at about P4.04 billion.

The IPO price was discounted from an earlier maximum offer price of P6.10 per share.

A market source privy to the offering said on Wednesday that at this pricing of P3.99 per share, investors will pay a little less than 15 times the income Metro Retail is likely to earn in 2016.

Comparable peers like Puregold Price Club Inc. and Robinsons Retail Holdings Inc. are respectively trading at higher valuations of 17.7 times and 20.58 times their expected earnings next year.

“As part of the institutional book building process, we have met with a significant number of institutional investors in Hong Kong, Singapore and Manila.  We are pleased with the high level of interest in the offering and the subsequent participation from both domestic and institutional investors in the institutional tranche of our offer,” Metro Retail chief executive officer Frank Gaisano said in a letter that announced the IPO pricing to the Philippine Stock Exchange on Wednesday.

“Given the recent market volatility, the positive outcome of the book building was a welcome development. Upon receipt of the permit to sell from the Securities and Exchange Commission, we expect to begin receiving subscriptions for the IPO that can accelerate our expansion plans, as described in our prospectus,” Gaisano said.

The Securities and Exchange Commission and the PSE earlier approved Metro Retail’s offering of up to 920 million in new shares, bringing to public hands about 26.71 percent of outstanding shares. There is also an overallotment option of up to 92 million common shares.

The stock offering of Metro Retail—the biggest retailer in the Visayas and the fourth largest in the country—will run from Nov. 9 to 13. Listing date on the main board of the PSE is scheduled on Nov. 24.

Bulk of the proceeds from the primary offering will be used to fund capital expenditures for the establishment of new stores.  The remainder will be used to establish a consolidated logistics and distribution center in Cebu as well as for working capital requirements.

Mandated as joint global coordinators and lead underwriters are BPI Capital Corp. and Deutsche Bank AG’s Hong Kong branch.

Metro Retail—which operates supermarkets, department stores and hypermarkets—plans to open at least seven stores in 2016.  It has secured 10 sites for stores that will open in 2016 and 2017, mostly in the Visayas region.  There are 30 new sites under evaluation in Visayas and Luzon.

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