Shell unit eyed for PSEi inclusion

Oil refiner and distributor Pilipinas Shell Petroleum Corp. debuted on the Philippine Stock Exchange Thursday with prospects of high dividends and eventual inclusion in the country’s main stock barometer.

“Pilipinas Shell has a very good potential to become part of the PSE index given the significant market capitalization,” BPI Capital managing director and chief operating officer Reginaldo Cariaso said in a briefing after the oil company’s listing Thursday.

Some investors who bought Pilipinas Shell’s IPO (initial public offering) shares have cited its potential inclusion in the PSEi—like Petron Corp.—and its generous dividend policy  as incentives to hold on to the stock.

The company has set a policy of declaring yearly 75 percent of previous year’s net profit as dividends. “We made it (75 percent) the minimum. We’re historically going as high as 100 percent [in dividend payment] but we’re giving management the flexibility to manage our cash flows. We think it’s a very superior dividend policy,” said Pilipinas Shell chief finance officer Jose Jerome Rivera Pascual IIII.

At its IPO price of P67 per share, Cariaso said Pilipinas Shell would have an initial market capitalization of about P108 billion while its public float of as much as 28 percent was seen to provide the ample stock trading liquidity sought by large institutional investors.

“It’s a stock that one can consider for inclusion to the main index in due course,” he said.

The PSE picks the country’s 30 most traded, most liquid and well-capitalized listed firms for inclusion in the local stock benchmark PSEi.

“It’s also a very good indicator for the Philippine economy,” Cariaso added.

BPI Capital is the domestic lead underwriter and bookrunner for the IPO, which could raise as much as P19.5 billion if the over-allotment option is exercised.  JP Morgan acted as global coordinator and international bookrunner.

Shares of Pilipinas Shell ended slightly higher during its listing on the PSE despite the gloomy local and regional stock markets.  Risk appetite was low during the run-up to the US presidential elections on Nov. 8.

At the end of the trading day, the newly listed firm’s shares rose by 0.3 percent to close at P67.20 per share.

It is the third company to complete an IPO in the country this year.

“We are delighted with the overwhelming response received by Pilipinas Shell from investors globally and see it as a vote of confidence in the future of the company and in its leadership,” said Pilipinas Shell president Cesar Romero.