Big John sells remaining interest in JG Summit

Tycoon John Gokongwei Jr.—who is planning to retire this year and focus on philanthropy—sold the bulk of his remaining shares in conglomerate JG Summit Holdings Inc. to global investors, raising $250 million in fresh funds in the first equity deal completed after the Philippine presidential elections.

This marked the largest equity placement in Southeast Asia in the last 16 months and the largest equity placement made by JG Summit, UBS Philippines managing director Lauro Baja told the Inquirer, when asked about the deal.

UBS arranged the equity deal, which was increased from the base offer of $200 million as it was oversubscribed by multiple times.

JG Summit told the Philippine Stock Exchange Thursday that Gokongwei—company founder and chair emeritus and director—had sold 142.5 million of his JG Summit shares at P82.10 for a total of P11.7 billion.

The shares placed out by Gokongwei were acquired by more than 50 global institutional investors, with the top 10 investors accounting for about two-thirds of the book, Baja said.

The deal was priced at a 6.1 percent premium to the average price of JG Summit so far this year although priced at a 5.5-percent discount to the 30-day average price.

Shares of JG Summit fell by 9.65 percent to close Thursday at P82.40 after the share sale, giving the conglomerate a market capitalization of P653.25 billion.

“Despite the sell-offs as evidenced by the fund-raising from the founder, the company remains a highly profitable company as its major subsidiaries continue to post hefty gains for the past several years,” said Manny Cruz, chief strategist at stock brokerage Asiasec Equities Inc.

Apart from raising funds for Gokongwei, who is turning 90 this year, the equity deal—which represents about 2 percent of JG Summit’s outstanding stock—widens JG Summit’s public float.

“The widening of float may be in conduction with the upcoming MSCI rebalancing slated next week (after the close of trades on May 31),” Cruz said, noting that the latest rebalancing of the closely tracked index was expected to give JG Summit an additional inflow of about $24 million.

“With MSCI, being the major fund index, other institutional funds are expected to follow the same trend in which they will likely position also on JG Summit,” Cruz said.

This deal leaves Gokongwei with about a little more than 58 million shares or about 0.8 percent stake in JG Summit, which is into snack food and beverage manufacturing, airline, petrochemicals, property and banking businesses.

To recall, Gokongwei sold in November last year about 475.38 million shares in JG Summit at P68.40 per share to his children.  Son Lance Gokongwei—director, president and chief operating officer of JG Summit—acquired 165.29 million shares, obtaining a 7.6-percent share in the conglomerate.

Gokongwei’s daughter, Robina Gokongwei-Pe, president of Robinsons Retail Holdings and also a director of JG Summit, acquired 105.31 million shares bought at P68.40 per share, getting around 2.5 percent direct stake in JG Summit after this transaction.

In 2006, when he turned 80, Gokongwei donated half of his JG Summit shares to charity through the Gokongwei Brothers Foundation, which is now one of the biggest shareholders of the conglomerate with a 27.88-percent interest.

Gokongwei, who hails from Cebu, is the great grandson of Pedro Gotiaco, one of the richest men in the country in the 19th century.  However, he was orphaned early and had to trade basic goods on a bicycle and on board a small boat off the pier of Cebu to support his widowed family.

He has lived through the American colonial era and the Japanese occupation in World War II, navigated the country’s tumultuous economic and political cycles as an entrepreneur and since then built a thriving conglomerate with expansive footprint across the Asia-Pacific.

Last December, Gokongwei said he intended to fully retire at 90 and focus on the philanthropical activities of the Gokongwei Brothers Foundation. He is turning 90 in August.