Shell in talks with 2 banks to handle planned IPO

MANILA, Philippines - Pilipinas Shell Petroleum Corp. is in talks with at least two banks to handle its planned initial public offering slated next year, industry sources said.

Shell is said to be tapping the Rothschild Group and Ayala-led Bank of the Philippine Islands (BPI) to handle its long delayed but mandated public offering.

A third bank is also under negotiations, a source said.

Pilpinas Shell country chair Ed Chua had earlier said the oil refiner would embark on its IPO next year. “We’re getting ready for it,” Chua said.

Sources said now that Shell is looking to do the IPO either in the first or third quarter of 2016 — or before or after the May elections. The firm may even sell more than the minimum 10-percent requirement by the bourse.

Shell, however, has yet to make an official announcement on which banks would handle its IPO.

Rothschild, for its part, is a global financial advisor that has a track record of handling the world’s biggest IPOs.

It has previously worked with Royal Dutch Shell, the UK oil giant and the parent firm of Pilipinas Shell, for the sale of 9.5 percent of Woodside Petroleum.

The planned IPO will come amid a string of court cases Shell is facing.

Just this week, the Court of Tax Appeals asked the firm to pay the government more than P3-billion worth of unpaid excise and value-added taxes. The unpaid taxes are allegedly for the importation of raw materials used to produce unleaded gasoline from 2006 to 2009 that is supposedly compliant with the Clean Air Act.

Nevertheless, Shell has been seeing an improvement in its operations, posting a net income of P3.6 billion in the first half of the year from a net loss of P500 million in the same period last year.

Likewise, its operation expenses decreased to P4.2 billion in the second quarter of the year from P4.6 billion a year ago primarily due to the decrease in overhead charges. 

Shell has also raised its authorized capital to 2.5 billion shares from one billion previously to beef up capital ahead of the listing.

The Oil Deregulation Act of 1998 mandates oil companies to list at least ten percent of their common stock within a period of three years since the effectivity of the law.

But Shell has put off this mandatory requirement for 17 years since the passage of the law through at least three administrations -- Ramos, Estrada and Arroyo.