UBS exercises Puregold option

MANILA, Philippines—Investment Bank UBS AG has exercised its option to place out more shares of newly listed retailer Puregold Price Club Inc., whose stock price has now improved after a rough start at the local equities market.

In a disclosure, Puregold said it received word that UBS would exercise the “overallotment” option under the international underwriting agreement for the IPO covering up to 90 million shares. If exercised in full, the overallotment could amount to P1.12 billion, based on the IPO price of P12.50 per share.

Shares of Puregold are now trading 15.8 percent higher than its IPO price. As of Friday, its share price closed at P14.48 per share, the highest level seen so far. This gave the country’s second-largest retailer a market capitalization of P25.48 billion.

The overallotment, or “green shoe” option, enabled underwriters to sell additional shares at the offering price in case of strong demand for the securities. Such an option will also allow the underwriter to stabilize the issue price.

UBS later will inform Puregold about the final amount of shares to be traded prior to the option closing date. Payment for, and delivery of, the shares will take place no later than November 9 this year, the disclosure said.

Despite the country’s strong consumer base, Puregold’s shares initially faltered when it listed its shares on October 5. This was when risk aversion was high at the global financial markets. But the retailer’s shares have rallied since then.

Puregold, led by the family of Chinese-Filipino businessman Lucio Co, has committed to boost profits, expand its geographical footprint and build a reputable image moving forward. For this full year, Puregold expects to book a net profit of P1.5 to P1.6 billion equivalent to P0.75 to P0.80 centavos in earnings per share. Comparative net earnings last year amounted to P750 million.

During its recent IPO, Puregold sold 600 million common shares—500 million of which were primary shares issued by the company, while 100 million secondary shares were sold by the Co family. About 420 million of these common shares, plus the 90 million in overallotment, had been sold overseas.