Foreign investors swarm historic Monde Nissin IPO

The landmark P55.89-billion stock debut of food manufacturer Monde Nissin Corp., the largest food and beverage initial public offering (IPO) yet in Southeast Asia, has attracted global investor demand of nearly six times the allotment for the international tranche.

This is according to Lauro Baja, head of global capital markets for Asia-Pacific at UBS, the lead global coordinator for this IPO, which is also the largest ever seen in the local stock market.

“Through Monde Nissin’s record-breaking IPO, the Philippines has proven that it is capable of attracting world-class equity investors in billion-dollar issue sizes,” Baja said in an interview with Inquirer on Saturday.

Out of the $1.15-billion (US dollar equivalent) equity deal, Baja explained that around $700 million had been taken up by 11 cornerstone investors of Monde Nissin, the company behind iconic brands such as Lucky Me! noodles, Skyflakes crackers, Fita crackers, Monde baked goods and Quorn meat-free products.

“Excluding the $700-million cornerstone tranche, $450 million is the book-build, so the deal was approximately four times oversubscribed,” Baja said. “Excluding cornerstone investors and the green shoe (referring to the over allotment option), the demand was about six times oversubscribed.”

Monde Nissin has offered 3.6 billion in primary common shares, with an overallotment option of 540 million common shares to be granted by selling shareholders, at a price of P13.50 apiece. The overallotment option is valued at around $150 million, which can be exercised within a 30-day period from June 1, the listing date.

International bookbuilding

Baja said hedge funds were expected to account for just less than 10 percent of the total deal. “This basically means that long-only or long-term investor component is one of the biggest in Philippine IPOs.”

In most IPOs in the Philippine market in the past, hedge funds, which typically have a higher risk appetite and have a shorter investing horizon, usually accounted for about 30 percent of subscription.

Of the 11 cornerstone investors, Baja noted GIC Private Limited and The Capital Group Fund had taken up around $300 million of the total $700-million block. “The cornerstone tranche is entirely taken up by long-only investors. No hedge fund,” he said.

Over 100 institutional investors participated in the international bookbuilding, of which 60 percent constituted Asian global investors, while 19 percent were from the US and 15 percent from Europe. About 7 percent consisted of domestic investors. INQ