Upson’s Octagon consumer electronics shop in SM Megamall. Photo from Upson’s IPO prospectus
The Securities and Exchange Commission (SEC) cleared the initial public offering worth as much as P4.34 billion planned for September by Upson International Corp., a leading consumer electronics retailer in the country.
In a statement on Monday, the SEC said it had approved the registration statement of Upson, operator of specialty retailing chains Octagon Computer Superstore, Micro Valley and Gadget King, subject to compliance with certain remaining requirements.
Upson is set to offer up to 789.47 million new common shares at a maximum price of P5.50 per share. The offer will also include 98.68 million common shares to be issued by a selling shareholder, with additional 98.68 million common shares as overallotment option.
This offering will bring to public hands up to 30 percent of Upson’s ownership, assuming exercise of the overallotment option. The registration will cover a total of 3.29 billion common shares.
The offering timetable, which is targeted within this month, is subject to further approval by the Philippine Stock Exchange. Upson’s shares will be listed and traded on the main board of the local bourse.
Net proceeds from the sale of primary shares will be used for store network expansion and general corporate purposes.
“To further cement our market leading position, we intend to continue to grow our store network and penetrate cities with high growth potential. We plan to open 50 stores in 2022 within National Capital Region, and key cities in Luzon, Visayas, and Mindanao. We target to open 250 stores, or an additional retail space of 25,000 square meters, from 2022 to 2026, with an aggressive rollout in the next three years,” Upson said in its latest prospectus.
Upson also intends to improve its supply chain capability by developing nine new warehouses and distribution facilities and renovating its six warehouses. The new warehouses and distribution facilities will be located in key areas such as Manila, Cabanatuan, Dagupan, Naga, Iloilo, Bacolod, General Santos, Zamboanga and Palawan.
As of March 31, Upson had a total of 188 stores across the country, as well as six warehouses in Manila, Cebu, Cagayan de Oro, and Davao City.
First Metro Investment Corp. is the issue manager and bookrunner for the transaction, joined by RCBC Capital Corp. as joint lead underwriter.
According to a study by the University of Asia and the Pacific – Center of Research and Communication Foundation Inc., Upson is the largest mall-based consumer electronics retailer in terms of store network and sales based on 2021 data.
The retailing chain sells international brands such as Acer, Asus, Lenovo, Brother, HP, DELL, Sony, Samsung, Sandisk, among others. It targets home users, small and medium businesses, gamers, professionals, and students, among others.
Apart from its mall-based stores, it sells products through e-commerce platforms such as Lazada, Pick-a-roo, and Shopee.
The company was founded in 1995 as Proton Microsystems and changed its name to Upson International in 2017. It started as a distributor of well-known global IT brands such as Logitech and Canon but shifted to retailing to stay in business when the Asian currency crisis erupted in 1997. It merged with former affiliate Columbia Computer International Corp. in 2003.
From 2019 to 2020, Upson grew its revenue and net income at a compounded annual growth rate (CAGR) of 8 percent and 78 percent, respectively. In 2021, it delivered a net profit of P403.64 million out of P8.57 billion sales revenue.
The original founders led by company chair Lawrence Lee, a seasoned entrepreneur, continue to guide the company to date.
Upson has committed an annual dividend payout of up to 30 percent of its net income from the preceding year, subject to the requirements of applicable laws and regulations.