Del Monte Philippines files for P44-billion IPO

MANILA, Philippines — Food manufacturer Del Monte Philippines Inc. is reviving its plan to go public in a bid to raise over P44 billion despite pandemic uncertainties.

The local unit of listed Del Monte Pacific Limited is planning to sell up to 699.3 million common shares at a price of P54.80, filing documents released by the Securities and Exchange Commission on Wednesday showed. Including an overallotment option of up to 104.9 million shares, Del Monte Philippines is set to rake in P44.07 billion in total proceeds. 

It was a plan that dated back three years ago, but was pushed back by Del Monte Philippines after a weak currency at the time battered the local stock market. Excluding other charges and fees, net proceeds from the upcoming initial public offering will be at P36.98 billion, which will be mainly used by its parent firm to pay old debts.

That said, Del Monte Philippines' decision to revive IPO plans comes at a challenging time for business in general as the pandemic lingers. According to the company, lockdowns meant to arrest the virus resulted into "significant decrease" in revenue from sales to food service channels in the 9 months ended January this year.

But that was offset by a "substantial increase" in revenues from sales of culinary products, driven largely by shift in home-cooking as people stay indoors to prevent catching the virus.

As it is, the Philippines is shaping to be a major IPO market this year. Just last week, food giant Monde Nissin Corp. cleared all listing hurdles for its mammoth P72.45-billion IPO this year, the largest in the country's history. Prior to this, Edgar "Injap" Sia was the first to arrive in this year's IPO party with last month's stock market debut of DDMP REIT Inc., his own real estate investment trust (REIT) firm.

Another REIT company, this time backed by property giant Filinvest Land Inc., is also set to go public this year. At the same time, the SEC also on Wednesday said it received the filing documents of  Asian Mergers and Acquisition Links Inc., which is planning to sell 130 billion primary common shares at P2 apiece.

"In general, I think these companies are opting for public a public debut to raise capital which will ultimately be used to deleverage from their current obligations," Arielle Santos, equity analyst at Regina Capital, said.

"Also, this way, their balance sheets will appear to be stronger amid pandemic," Santos added.