Puregold sets IPO price at P12.50

MANILA, Philippines - Filipino-Chinese businessman Lucio Co’s supermarket chain Puregold Price Club priced its initial share sale at P12.50 each, the bottom of a revised indicative price range.

Eduardo Francisco, president of BDO Capital & Investment Corp., said they decided to peg the initial public offering (IPO) price at the low end to give upside to investors even as he notes that there is strong demand from foreign investors.

The company earlier priced the shares at P12.50 to P16.50 each, a reduction from the original plan of a maximum of P18 per share.

Puregold, which operates 77 grocery stores across the country as of end-August this year, will sell up to 500 million new shares through a primary offering and 100 million existing shares held by majority shareholders.

It has an option to sell another 90 million shares in case of strong demand.

The shares to be offered represent 34.5 percent of the company’s issued and outstanding capital stock after the IPO.

The share issuance is expected to fetch P7.5 billion, P6 billion of which will go to Puregold while the balance of P1.5 will go to the selling shareholders. The proceeds may reach up to P8.62 bllion should the company decide to exercise the over-allotment option.

The domestic offering will kick off on Sept. 23 and run until Sept. 29 while the shares will start trading on the local bourse on Oct. 5.

Hongkong and Shanghai Banking Corp. Ltd., and UBS AG were the issue’s international lead managers while BDO Capital & Investment Corp. and First Metro Investment Corp. serve as the domestic lead underwriters.

Evercore Partners, on the other hand, is Puregold’s financial adviser.

Proceeds from the IPO will be used to bankroll new store openings and settle loan obligations to China Banking Corp., Metrobank and Banco De Oro.

Of the total shares, up to 420 million were offered overseas while the remaining 180 million will be sold to domestic investors.

Puregold would have a market capitalization of P36 billion once listed on the exchange.

The company is the second largest retailer among hypermarkets and supermarkets. From only one store in 1998, it has grown to 72 in 20 cities and 22 municipalities throughout Metro Manila and the main island of Luzon as of July 2011.

In the six months ending June this year, the company posted a net income of P782.8 million, up 269 percent from P782.8 million a year ago. Net sales likewise grew 41 percent to P17.3 billion.