MANILA, Philippines – The Securities and Exchange Commission (SEC) approved the P29.7-billion initial public offering (IPO) of oil company Pilipinas Shell Petroleum Corporation.
SEC Commissioner Ephyro Luis Amatong said in an interview following their en banc meeting that the commission gave its nod to the IPO, which could be one of the largest maiden share offerings in the country.
“With approval by the commission today, the timeline suggested by Shell and its underwriter BPI Capital will still be completed by November,” Amatong said.
He added that Pilipinas Shell plans to push through with its IPO despite the current decline in the stock market. (READ: Pilipinas Shell IPO to happen soon?)
Amatong said the commission also granted the request of Pilipinas Shell to allow local small investors to buy more than the maximum P20,000 worth of shares.
“You have to understand that this is a large IPO, so one of the things they requested is for local small investors to apply for more than the maximum of P20,000,” he explained.
Amatong noted that the SEC approved the request provided that the oil company will initially satisfy all the requests from local small investors to purchase P20,000 worth of shares.
Based on the latest registration statement filed with the SEC, Pilipinas Shell will sell up to 300 million primary and secondary shares, as well as an over-allotment option of up to 30 million shares at an offer price of up to P90 per share.
Of the 300 million offer shares, 270 million are secondary shares to be sold by selling shareholders including Shell Overseas Investments BV, The Insular Life Assurance Company Limited, and Spathodea Campanulata Incorporated.
Only 30 million are primary shares.
This means that the selling shareholders will receive P26.48 billion in net proceeds from the IPO, while the company will get P2.7 billion which will be used to fund capital expenditures, working capital, and general corporate expenses.
The offer shares represent 18.6% of the company’s outstanding capital stock. (READ: Shell IPO late by 12 years now – DOE)
The oil firm hired JP Morgan as the global and international book runner, while BPI Capital Corporation is the domestic lead underwriter and domestic book runner.
Rothschild, meanwhile, has been tapped to be the financial adviser.
The offer period for the IPO has been tentatively set for October 26 to November 3, while listing date has been set for November 10.
Pilipinas Shell’s planned share sale is in compliance with the Oil Deregulation Law of 1998, requiring oil refiners to list 10% of their shares in the local stock market.
The oil firm’s IPO, however, has been delayed for more than a decade due to unfavorable market conditions, low oil prices, and regulatory issues in the previous years.
Pilipinas Shell had the second largest overall market share (in terms of volume of fuel sold) of the domestic retail fuel market at approximately 29% based on industry data.
As of end-June 2016, it has 996 retail service stations across the country.
Pilipinas Shell also owns a 110,000-barrel-per-day refinery in Batangas, which recently underwent an upgrade to deliver Euro 4 compliant fuels.
It is one of the only two integrated refining and marketing companies in the Philippines.
Pilipinas Shell will be the third company to conduct an IPO this year. The first two were Golden Haven Memorial Park Incorporated and Cemex Holdings Philippines Incorporated.
Among the largest IPOs conducted in the PSE to date include Robinsons Retail Holdings Incorporated, the Sy family-led conglomerate SM Investments Corporation, Cemex Holdings, and Cebu Air Incorporated. – Rappler.com
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