SM Investments’ P28.75-billion IPO – the largest in the bourse’s history – failed to improve market sentiment as investors liquidated their holdings, especially with renewed security concerns, analysts said.
Its shares of fell to as low as P239, with an intraday high of P248, disappointing analysts who had high hopes that the IPO of the investment holding company of retail tycoon Henry Sy and the SM Group could improve the market’s performance.
Some analysts, however, are unfazed by the lukewarm debut, noting that the listing came at a time the securities market is undergoing a technical correction following a strong run-up. They said investors may just be cooling their heels until after the long weekend before positioning in the stockmarket.
Unperturbed by the stock’s initial performance, SM Investments co-vice chairman Henry Sy Jr. said this was not a concern as the group is looking more at maximizing shareholders value and charting the future of the company.
SM Investments, which holds the Sy family’s interests in commercial centers, financial services, retailing and real estate development and tourism, raised a total of $528 million from the IPO, which will be used to pay off debts, fund the final phase of Mall of Asia in Manila, and develop leisure resorts in provinces south of Manila.
SM Investments said the international tranche of its IPO was more than six times oversubscribed, with demand at more than $2 billion.
It offered a total of 115 million shares to both local and foreign investors.
The listing of SM Investments brings to four the total number of Sy-owned companies listed on the exchange. Already listed are mall developer SM Prime Holdings Inc., Banco de Oro Universal Bank, and SM Development Corp. The Sy family also has a 23.7-percent stake in listed leisure firm Highlands Prime Inc.
Newly-elected PSE chairman Peter Favila said SM Investments’ IPO is a strong testament to the holding firms’ faith in the resurgence of the economy and will entice more companies to list on the exchange.
Finance Secretary Cesar Purisima, for his part, said the IPO augurs well for the country and shows that financial markets are once again looking at the Philippines as an investment destination.
"It just shows that when we get our acts together and establish a healthy environment, there will be more entrepreneurs who will be doing business in the country, there will be more IPOs," he said.
Despite the success of its businesses, the Sy family is not keen on diversifying into other areas, according to SM Prime president Hans Sy. "There are no plans of diversifying into other areas. We will continue to focus on retailing, financial services and property development. Come good time or bad time, we continue growing because we’re focused on these areas."
For this year, Sy said SM Prime will open four malls: SM Mall of Asia, SM City San Lazaro, SM City Molino, Cavite and SM Sta.Rosa, Laguna. The company plans to set up five new malls in 2006, possibly including Clark, Pampanga and Lipa, Batangas.
Sy said the SM department store in Cubao will face a major facelift in line with efforts to provide better service to the public. SM Prime may spend less than P350 million for the renovation which is expected to take about two years.
SM Prime chief executive officer Jose T. Sio said the company is expected to post a 10 to 14 percent growth in its 2004 net income on strong consumer spending. In 2003, SM Prime reported a net income of P4.2 billion, up eight percent from the previous year’s P3.86 billion. Revenues, on the other hand, are seen to increase by 15 to 16 percent due to higher rental revenues.
This year, SM Prime has earmarked P5 billion for the construction of new malls and acquisition of real estate properties for future expansion.
SM Mall of Asia is envisioned as the country’s premier shopping destination and tourist attraction and the biggest shopping mall. The first phase, which involves the development of main mall, an entertainment complex and two parking buildings with a gross floor area of 300,000 square meters, is expected to be completed in the fourth quarter of 2005.
Mall of Asia is located at the coastal edge of one of the six reclaimed islands along the coast of Manila Bay.
Sio said plans are now underway for the construction of a hotel which will form part of the second phase of construction of the Mall of Asia. The SM Group is looking for a strategic partner to manage the hotel which will be called SM Mall of Asia Hotel.
Other plans include the establishment of an information technology hub to be called SM City to serve as a location for companies engaged in software development and IT-enabled services such as call centers, data encoding, and transcribing and processing. A total of 69,300 square meters is allocated for the IT building within the SM Central Business Park along Manila Bay.