BDO Capital & Investment Corp. president Ed Francisco said the offer price, which was set in the middle of the indicative price range, is 12 times PhilNaRe’s estimated price earnings for the year.
At P3.80 each share, PhilNaRe stands to raise P2.42 billion from the offering of 638 million shares to the public, accounting for 30.7 percent of the company’s outstanding capital stock.
The offering starts on April 16 until April 20 while listing has been set on April 27.
Proceeds from the offering will be used to boost PhilNaRe’s capacity to accept and retain premiums, allowing it to compete in the regional reinsurance market.
PhilNaRe is the country’s only domestic professional reinsurance firm, providing life and non-life reinsurance capacity to the Philippines and neighboring insurance markets.
Three major institutional investors hold stakes of 24 percent each in PhilNaRe, namely the Government Service Insurance System (GSIS), Universal Malayan Reinsurance Corp. and the BPI Group. Various insurance companies and individual shareholders own the remaining 18 percent.
PhilNaRe is eyeing a net income of P627 million this year or almost double the P316-million profit reported in 2006. Gross premiums are forecast to reach P5.21 billion from only P3.88 billion in 2006 while investment and other income is seen to hit P506 million from P343 million.
The company is building its capital base to at least P5 billion from the current P3 billion as it seeks to become a regional player in the reinsurance market.
From a meager paid-up capital of P10 million and P20 million in gross written premiums in 1979, PhilNaRe has grown in a span of two decades to become the sole professional reinsurance company in the country.
Based on its financial statements for 2006, PhilNaRe generated P3.78 billion of gross premiums written, total assets of P9.12 billion and total shareholders’ equity of P3.83 billion.
Several Asian entities, mostly from Singapore and China, have signified interest to invest in PhilNaRe. The International Finance Corp., the investment arm of the World Bank, likewise expressed interest to infuse fresh capital in PhilNaRe.