GMA Network prices IPO at P8.50

Broadcast firm GMA Network Inc. has priced its initial public offering (IPO) at P8.50 per share, or 20.15 times the company’s 2006 earnings and reflects the high level of interest in the network, the issue underwriter said yesterday.

The company was earlier looking at selling the shares at between P7 and P8.50 each share.

The demand for shares is “unprecedented” with the international offering closing heavily oversubscribed, according to the issue’s lead underwriter ATR-Kim Eng Capital Partners Inc.

“Demand for GMA shares is unprecedented since the time the IPO market started to make a comeback three years ago.  The international tranche is so “many times oversubscribed,” which explains why the shares were priced at the top end of the indicative range,” said  ATR-Kim Eng Capital managing director Roberto Benares.

Benares said GMA’s IPO was warmly received by foreign investors from Hong Kong, Singapore, London, New York and Boston.

“Investors are buying because of the GMA name, it’s a marquee name and given its dominant presence in the broadcasting industry.  GMA is number one in Greater Manila.  People truly believe in the GMA story and its good earnings prospects,” Benares said.

Menardo Jimenez Sr., former president and chief executive officer of GMA and who holds 35 percent of the network, said GMA is now valued at P42 billion from only P16 billion in 2000, thanks to the wide-ranging reforms implemented by management to steer the broadcasting firm to the top spot. 

As of end-December last year, GMA was the highest rated TV  network in Mega Manila, according to AGB Nielsen Media Research Phils.   Its total day household ratings and audience share in Mega Manila were 17.6 percent and 42.1 percent, respectively, which were higher than ABS-CBN’s 13.4 percent and 32.2 percent, respectively.

 GMA is expected to raise P7.76 billion from the IPO, P1.55 billion of which will go directly to the company while the balance will go to the selling shareholders.

It is selling 91.346 million shares to local investors and 822.115 million Philippine Depositary Receipts (PDRs), of which 70 percent has been allotted for foreign investors.

Up to 13.7 million common shares and 123.3 million PDRs have been set aside for the greenshoe or over-allotment option.

The domestic offering starts today and will run until July 24 while the listing of the shares has been set on July 30.

Bulk of the IPO proceeds will be used by the network to fund capital expenditures for this year and next, amounting to P1.888 billion. These include the completion of two new state-of-the-art studios, the comprehensive roll-out of the regional signal strengthening and upgrade project, the implementation of a media asset management system, maintenance expenditures and the build up of the company’s regional infrastructure, production and studio facilities.

The network also plans to use a portion of the net proceeds for general corporate purposes.

Philippine Stock Exchange president Francis Lim said it was about time GMA list its shares given the clamor for big-ticket issues.

“ I’m happy that GMA is finally going to the market.  Based on what I’ve been hearing, investors have been waiting for this,” Lim said.