Del Monte IPO shelved, ‘market volatility’ cited

Food and beverage firm Del Monte Pacific Ltd. has shelved the planned listing of its Philippine unit, citing volatile market conditions and extending a dearth of initial public offerings at the Philippine Stock Exchange.

Final pricing for Del Monte Philippines, Inc.’s (DMPI) P17.5-billion IPO was supposed to have been announced last Wednesday, June 6, and the offer period was to run from June 8 to 18 with a June 25 listing.

“The company had secured the necessary approval from the Securities and Exchange Commission, the Philippine Stock Exchange and the company’s shareholders at a meeting on 1 June 2018,” dual-listed Del Monte Pacific said in disclosures to the PSE and the Singapore Exchange.

“However, market conditions continue to be volatile and the company has been advised by its bankers and advisors that it would be in the best interest of the company and DMPI to defer the offering until such time when market conditions improve,” Del Monte Pacific added.

“The company will make further announcements in relation to the offering as appropriate.”

Del Monte Philippines had planned to issue 587.4 million secondary shares at up to P29.88 apiece, with the proceeds to be used to partially prepay or repay Del Monte Pacific loans worth P6.8 billion, repay certain payables to Del Monte Philippines of about P3.5 billion; refinance or reacquire certain Del Monte Pacific financial obligations of up to P6 billion, and cover offer-related costs.

BDO Capital and Investments Corp., which was tapped to be the issue manager, global coordinator and bookrunner for the deal, was unavailable for comment on reports that the offering had met with lukewarm interest.

The PSEi has been described as Asia’s worst-performing equities index this year, having fallen by nearly 9 percent since the start of the year as investors pared portfolios due to domestic and overseas concerns ranging from a falling peso, rising inflation and prospects of a global trade war.

The benchmark index was up 1.49 percent on Thursday, adding 114.17 points to close at 7,803.31, tracking a regional rally spurred by overnight gains on Wall Street.

Del Monte Pacific also closed up for the day, adding 30 centavos or 3.41 percent to P9.10 per share.

Diversified Securities, Inc. trader Aniceto Pangan agreed with Del Monte Pacific’s move, saying “ conditions are not right, not optimistic for an IPO.”

“I think [a listing during]the second half of the year [will be better],” he added, contingent on market-boosting developments such as lower crude prices.

Timson Securities, Inc. trader Jervin de Celis also said that Del Monte Pacific had made the right decision given current trading conditions.

“Foreigners are still on a selling spree due to the string of bad news coming from the western markets,” he said.

“Apparently, investors are still seeking safer havens … due to various reasons such as the political crisis in Italy, trade tensions between China and the US, the stronger dollar and rising interest rates as well as commodity prices reaching multi-year last month.”

With the shelving of Del Monte Philippines’ IPO, market observers’ attention will now turn to DM Wenceslao and Associates, Inc.’s plans to go public.

The property and construction firm has also secured all regulatory approvals for the P15.5-billion offering. Final pricing is expected to be announced today prior to the start of a June 18-22 offer period and a June 29 listing.

De Celis said “Wenceslao’s IPO might not be received warmly by the market as we still [trying to]find fresh catalysts to push our market back above 8,000.”

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