SMC prepares for massive equity offer involving SMFB

Conglomerate San Miguel Corp. has put in motion what could be the largest equity offering in the local capital market—potentially valued at around P141.8 billion—by selling 17.26 percent of consumer powerhouse San Miguel Food and Beverage Inc. (SMFB).

SMC is selling up to 887 million common shares in SMFB—a newly created vehicle for its traditional businesses—with an option to increase by 133.05 million common shares at maximum price of P140 a share, based on a prospectus submitted to the Securities and Exchange Commission dated Aug. 22.

This implies that the secondary offering of as much as 1.02 billion common shares can bring the market capitalization of SMFB to P826 billion ($15 billion) while restoring the public float to the mandatory level for continuing listing.

The indicative price for the offering was much higher than the $12-billion valuation eyed by SMBC president Ramon S. Ang for 100 percent of SMFB.

Shares of SMFB surged by 15.12 percent to close at P92.10 a share on Thursday, giving it a market capitalization of P473 billion ($8.9 billion) on news of the capital-raising.

The follow-on or re-initial public offering (re-IPO) of SMFB is targeted by October, subject to regulatory approvals.

The largest capital-raising activity in the Philippine Stock Exchange so far was likewise undertaken by SMC in September 2012 with the landmark sale of P80 billion worth of preferred shares.

SMC has mandated JP Morgan Securities Plc, Morgan Stanley Asia (Singapore) Plc and UBS AG Singapore as its going global coordinators while Deutsche Bank AG Hong Kong and Goldman Sachs (Singapore Plc) are the joint bookrunners.