Shell eyes P29.7B from record IPO

MANILA, Philippines – Pilipinas Shell Petroleum Corp. is finally pushing through with its long-delayed initial public offering, aiming to raise up to P29.7 billion in what could be the country’s biggest IPO ever.

In a registration statement filed with the Securities and Exchange Commission, PSPC said the proposed offering of up to 330 million shares was in accordance with its obligations under the Downstream Oil Industry Deregulation Act.”

About 300 million shares will be offered to the public at P90 per share with an option for additional 30 million shares to cover over-allotment.

Net proceeds from the offering will be used to cover capital expenditures, working capital and other corporate expenses.

Analysts said PSPC’s IPO comes at the right time as the stock market has been on an upward trend since President Duterte assumed his post.

Lexter Azurin, equity research head of Unicapital Securities Inc., said in a phone interview the market remains on a bullish mode which should be positive for PSPC which plans to list its shares on the local bourse this year.

“We’re still in a bull market so demand will be there especially this is only the third IPO of the year.   Investors are a bit excited for that,” he said.

Azurin said PSPC could even offer its shares at the maximum price given a buoyant equities market.

“Valuations are quite high for the Philippines, meaning, they can offer shares at a premium versus the region,” he said.

Regina Capital Development Corp. managing director Luis Limlingan expects  PSPC’s IPO to be a sure hit.

“The public has been clamoring for them to list for quite some time, the recent IPOs show that investors have been taking up the positions well and market conditions are ripe to price Shell at attractive valuations,” he said.

The IPO has been delayed for over a decade cue to unfavorable market conditions. 

Under the Oil Deregulation Act of 1998, oil companies are mandated to list at least 10 percent of their common stock within a period of three years from the effectivity of the law.

PSPC’s IPO could be the third IPO that will list on the stock exchange Golden Haven Memorial Parks Inc. and Cemex Holdings Philippines Inc.

For his part, Eagle Equities president Joseph Roxas said the success of the IPO would hinge on the final offer price.

“It’s a good time for Shell’s IPO but the only problem is the price. There are existing listed oil companies like Petron Corp. and that will be compared to Shell’s ratio, earnings per share,” he said.

Roxas, however, said an IPO is usually seen as a safe bet  by market players, which should boost the demand for the offering especially amid positive sentiment in the local market and in the economy in general.

PSPC tapped has tapped JP Morgan as the global coordinator and international bookrunner and BPI Capital Corp. as the domestic lead underwriter and domestic bookrunner.

Rothschild  is PSPC’s financial advisor for the IPO.