Consumer technology firm Xurpas Inc. raised P1.2 billion in fresh capital from a “top-up” equity deal, replenishing its war chest for future expansion while widening its public ownership.
Xurpas is “looking at expanding to other markets,” company president Nico Jose Nolledo said when asked about the rationale for the equity deal.
Nolledo said Xurpas was hoping to strengthen existing investments and looking at other growth opportunities for mobile products.
The founding shareholders of Xurpas, including Nolledo, sold around P2.5 billion worth of shares to new investors but ploughed back nearly half of the proceeds in the “top-up” equity deal disclosed Tuesday.
With the transaction, trading liquidity is enhanced as the deal will widen the public float to 28 percent from 20 percent.
At the same time, the shareholders pocketed some gains from the share price appreciation seen since Xurpas went public in end-2014.
The equity deal was arranged by investment house SB Capital, which worked with American firm Decker & Co.
Based on the disclosure, Nolledo, treasurer Raymond Gerard Racaza and chief technology officer Fernando Jude Garcia agreed to sell a combined 155.4 million of their existing shares to the market at P16 a share. However, they will also subscribe to 77.7 million new common shares to be issued by Xurpas, equivalent to 4.32 percent of the enlarged capital stock, at the same price per share of P16.
The “top-up” equity offering allows corporations to quickly tap the capital market by putting up for sale shares “lent” by key shareholders. But in this case, the three shareholders each pared their stake to 23.1 percent from 25.7 percent.
The deal was priced at four times the company’s initial public offering price tag of P3.97 a share in December 2014.
Decker said the equity deal, which was done through overnight placement, brought in 21 global funds including Philippine qualified institutional investors and funds across Asia, Europe and the U.S. as new Xurpas investors.
Commenting on the deal structure, Decker founder and CEO Mark Decker said: “The structure and ease of the transaction is important for both the issuer and for global fund investors. In this case, the placement was a partial top-up offering, which was popular in the last decade, and we feel it is a good structure for smaller companies. Decker & Co., along with our local partners throughout ASEAN (Association of Southeast Asian Nations), looks to use this structure in future transactions as well.”
“The key takeaway from a deal like this one is global funds’ interest in high-quality companies,” Decker said. “We’ve been able to introduce quality companies and management teams in the U.S. and globally because we are continually digging to find the ‘diamonds’ in Asia, some of which get little attention from our peers. The breadth of interest in the Xurpas placement underscores global investors’ interest in these gems.”
Decker, for its part, has introduced 47 management teams to U.S.-based global investors over the past three years. “We will continue focusing on quality companies in the $1 billion market cap range and expect to see future transactions given global investors’ keen interest in quality despite challenging market conditions,” Decker said.
Trading on Xurpas shares was halted at 9 a.m. Tuesday to allow investors to digest the material impact of this new equity deal. Doris Dumlao-Abadilla