SM Purefoods to raise $400M from overseas equity offering

MANILA, Philippines - Local food giant San Miguel Pure Foods Co. Inc. (SMPF) is hoping to raise as much as $400 million from an overseas equity offering to widen  its public float.

Sources said SMPF, which is hard pressed to meet a stock exchange ruling that requires listed firms to have a minimum public ownership of 10 percent,  intends to start accepting orders from institutional and retail investors beginning Nov. 12.  Its public float currently stands at 0.08 percent.

The company has reportedly tapped UBS AG, Standard Chartered and Malayan Banking Bhd., as financial advisors.

SMPF is one of three units of diversifying conglomerate San Miguel Corp. with public ownership of less than 10 percent.  The two others include San Miguel Brewery Inc. and San Miguel Properties with a public float of 0.61 percent and 0.06 percent, respectively.

The stock was last traded on Sept.4, at P900 each share.

Listed companies that fail to meet the mandated 10-percent public float by the end of December face trading suspension for up to six months, by the first trading day of 2013.  Aside from this, errant companies must still pay listing fees while they are suspended.

After the lapse of the suspension period, they will automatically be delisted from the local bourse unless they have by then complied with the requirement.

During the trading suspension, sale of shares may be effected only outside the trading system of the PSE and the transactions will be subject to a capital gains tax of between five and 10 percent.

With the deadline for listed firms’ compliance with the minimum public float requirement nearing, Purefoods has reportedly embarked on a road show to drum up support for its planned share sale.  The company is looking to boost its public float  to as much as 25 percent.

The share sale comes at a good time time when investor confidence in the country’s economy continues to soar amid steady remittances from Filipinos working overseas, record low interest rates,  strong domestic consumption, a manageable inflation and  recovery of electronics exports.

The rise of the call center industry, which has overtaken India as the largest over the past several years, has fueled consumer spending.

Investor confidence was also attributed to President Aquino’s efforts to pump prime the economy by undertaking more infrastructure projects.

The Philippines has emerged as one of the best performers among Asian stock markets, rising by 24 percent so far this year.

SMPF owns the brands Purefoods-Hormel, Magnolia, Monterey, Star, San Mig Coffee, and B-Meg.  It accounts  for six of every 10 hotdogs and four of every 10 chickens sold in the country.

It has a presence in Vietnam and Indonesia through two subsidiaries.  San Miguel Purefoods (VN) Co. Ltd. is a profitable hog farming and feed milling business and seller of Le Gourmet processed meat products. 

PT San Miguel Pure Foods Indonesia, meanwhile, is a leader producer and marketer of halal fresh processed meat products for retail, food service and institutional customers in INdonesia.  Its product line includes sausages, meatballs, luncheon burgers and cold cuts.

SMPF has set a capital spending of P4 billion this year to further expand its operations. It is putting up a new grains terminal in Mabini Batangas, slated for operations in the third quarter of 2013.  The terminal is designed to accommodate larger vessels which would reduce freight costs.