AllDay Marts’ IPO price slashed by 25% to attract retail investors

Villar-led supermarket chain operator AllDay Marts Inc. has priced its initial public offering (IPO) at 60 centavos per share, thus finalizing the offering size of the country’s newest grocery “pure play” at P4.53 billion.

“It was priced to sell because it’s targeting local investors,” said Joseph Roxas, president of Eagle Equities Inc. This would also likely be attractive to retail investors, he added.

The offering was priced 25 percent lower than the earlier indicated maximum price of 80 centavos per share. At this price, the IPO was oversubscribed by 2.5 times the base offer, said a market source privy to the equity deal.

COL Financial estimated that at the final IPO price, investors would pay 21.2 times likely earnings in 2022, assuming that store expansion was in the bag, margins would improve due to scale and high-cost debt would be retired. While this was more expensive than the 2022 price-to-earnings multiple of Puregold (12.5x), it was cheaper than the 23.5x median multiple for comparable retailing peers.

Stock brokerage Regina Capital Development Corp., which initiated coverage on the company, said the offering was “fairly valued.”

It said its synergy with the Villar group, which has interests in property development and other retailing formats, gave it an edge, and so with its take on innovation, sustained uptrend in profitability and thrust on “premiumization,” which rides on increasing consumer affluence.

However, it said AllDay Marts still had a relatively small market share compared to other players, low store count and could be subject to some political risk. Some Villar family members are involved in politics and holding key legislative positions.

Chaired by business tycoon and former politician Manuel Villar Jr., AllDay Marts has a total of 33 stores with 55,881 square meters of total net selling space as of end-June. It plans to expand its store network to 45 by 2022 and 100 by the end of 2026.

Pandemic-proof play

AllDay Mart’s offering period will run from Oct. 18 to 25. Tentative listing on the main board of the Philippine Stock Exchange under the ticker “ALLDY” is slated for Nov. 3.

As grocery operation is deemed an essential retailing format that can withstand mobility restrictions, AllDay Marts’ stock debut is also pitched as a pandemic-proof play.

AllDay Mart will bring to the market up to 6.86 billion primary common shares, with an option to upsize by 685.71 million shares. Upon completion of the offer, about 30 percent of AllDay Mart’s shares will be held by the public, which can increase to 33 percent with the full exercise of the overallotment option.

Proceeds from the IPO will be used for debt repayment and capital expenditures for store network expansion.

Ten percent of AllDay Marts’ firm offer shares will be reserved for local small investors.

The offering will give AllDay Marts a post-IPO market capitalization of P13.7 billion.

PNB Capital and Investment Corp. is the sole issue manager for the transaction. PNB Capital will work with BDO Capital & Investment Corp. and China Bank Capital Corp. as joint lead underwriters and joint bookrunners.