IPO and more in December
The market may now be precariously hanging from a thin branch after falling deep into negative territory. Still, it has managed to support four initial public offerings (IPO) for the year.
The latest is the ongoing IPO of pizza restaurant chain Shakey’s Pizza Asia Ventures Inc. (SPAVI), which reportedly has also been successful in its foreign offering. SPAVI is the third company controlled by the Po family to be listed after Arthaland Corp. and Century Pacific Food Inc.
The three other companies that took the IPO route to raise money from the investing public were: Golden Haven Memorial Park Inc., Cemex Holdings Inc. and Pilipinas Shell Petroleum Corp.
Offer terms
Offered to the public at the price of P11.26 a share, SPAVI will be able to raise as much as P3.96 billion from the sale of 351.9 million common shares—104 million primary shares and 202 million secondary shares held by Arran Investment Private Ltd., a unit of GIC Private Ltd., the sovereign wealth fund of Singapore. The issue also has an over-allotment option of 45.9 million secondary shares.
The offer period started last Dec. 2 and will end on Dec. 8. Listing date has been tentatively set on Dec. 15. Of the total offered shares, 70 percent has been allocated for subscription by overseas investors while the remaining 30 percent has been set aside for local investors.
As disclosed, the sales proceeds of the IPO would be to partially repay a loan from BDO Unibank and to fund the capital expenditures for its new commissary as well as the relocation of its headquarters.
With an estimated investment per store of P15 to P25 million, SPAVI expects to roll out 10 to 15 Shakey’s stores annually over the next five years. The company, however, expects to open seven stores before the end of the year and 20 more stores in 2017. As of June, Shakey’s in the Philippines has grown to 177 stores, the first of which was opened in 1975.
SPAVI also “owns perpetual rights to the Shakey’s brand for the Middle East, Asia (excluding Japan and Malaysia), Australia and Oceania.”
With a tag price that appears to be cruising the market’s current higher price band, SPAVI remains attractive considering the growth outlook seen for the country.
Bottom line spin
In the University of Asia and the Pacific’s (UA&P) 2016 yearend business economic briefing, economist Bernardo M. Villegas was fully convinced that an 8-percent growth goal for the country was now but a cinch to attain owing to its young population and other economic fundamentals.
Of the country’s 102 million population, he pointed out that 43.6 percent were young dependents and only 4.08 percent were aged dependents. The remaining 52.3 percent were of working age.
More than that, this so-called sweet spot in the country’s population has a comparative advantage in terms of talents and skills, not to mention their low cost of labor, English proficiency, affinity to western culture and high level of commitment and loyalty, he added.
Villegas is not worried of the impact on the local information technology and business process management (IT-BPM) industry of US President-elect Donald Trump’s campaign of protectionism. Based on 2010 figures, the labor cost for English outsourcing in the US was estimated between $70,000 to $72,000 a year as compared to the Philippines’ $15,000 to $16,000, a bit higher than India’s $14,000 to $15,000.
Further growth will be realized, too, as the government rolls out its big ticket infra projects that are expected to bring increased domestic tourism and local commerce.
Inflation may hit 3-3.5 percent in the next two years while the peso-dollar rate may range between P48.50 to P50 to $1.
Opportunities seen in the economy is liquidity in the financial sector, increase in OFW remittances, increase in domestic tourism, expansion in mining and energy investments, heavy infrastructure spending, expansion in low- and medium-cost housing and office buildings, medical tourism and retirement villages, and shift to high-value agribusiness products.
