SEC OKs record P29.7-B Shell IPO

MANILA, Philippines – Pilipinas Shell Petroleum Corp. has finally been given the green light to proceed with its much awaited P29.7 billion initial public offering (IPO), the biggest market debut at the Philippine Stock Exchange.

The Securities and Exchange Commission (SEC) approved the record IPO during its en banc meeting yesterday, said SEC commissioner Ephyro Amatong.

Amatong said despite the prevailing market volatility, Shell has conveyed its plan to proceed with the IPO.

“They will push through. The market is still at 7,500 level,” Amatong said.

He said the company has also not changed the timetable to launch the offer in October and proceed with the listing on Nov. 10.

The company is offering 330 million shares, including an over-allotment of up to 30 million, for up to P90 per share, according to the regulatory filing.

Shell said proceeds from the sale of primary offer shares will be P2.7 billion which will fund capital expenditures and other requirements.

Selling shareholders, who will sell 270 million secondary shares, will get P26.48 billion in net proceeds.

Of the P2.7 billion proceeds from the sale of primary shares, up to 60 percent will be used to expand the company’s existing retail network while 25 percent would be used for the general maintenance and upgrade of its refinery in Batangas so that it would be able to produce bitumen, a residue from petroleum distillation used for road construction.

The balance will be used to enhance supply and distribution network and other general working capital requirements.

Shell has tapped JP Morgan and BPI Capital as underwriters. It also tapped Rothschild as financial advisor.

Shell had the second largest market share in the country in terms of fuel sold at 29 percent as of end-2015.

As of end-June, the company had a widespread network of 966 retail service stations, of which 583 are in Luzon, 160 in the Visayas and 223 in Mindanao.

Shell’s IPO comes at an opportune time given the company’s improving finances.

The oil giant reported a net income of P5.072 billion in the first half of 2016, sustaining its rosy financial performance last year, according to documents filed with the SEC.

The amount is 28 percent higher than the P3.962 billion recorded in the first half of 2015, documents also showed.

For full year 2015, Shell posted a net income of P3.6 billion, a marked turnaround from two consecutive years of incurring a net loss -- P8.488 billion in 2014 and P912 million in 2013.