Splash allots P1 billion for brand acquisitions

Splash Corp., the country’s largest Filipino-owned personal care and cosmetics maker, is setting aside P1 billion for the acquisition of new brands in its bid to further grow its multi-billion peso business.

Splash chief executive officer Rolando Hortaleza said the company is looking at acquiring two or three local brands in the personal care and wellness sectors. He, however, declined to identify the target brands pending completion of negotiations with the prospective parties.

Hortaleza said the company is bent on launching more innovative products to enable it to take advantage of the opportunities presented by the strong local demand for personal care and health and wellness products. The market potential of these products in the Philippines is estimated at P5 billion.

Consumer spending on health and wellness is increasing as a result of the rising health consciousness among consumers. More consumers are turning to organic or natural-based health products as more and more artificial or chemical-based products are proven to have adverse side effects.

Although the P70-billion personal care industry continues to be dominated by multinationals, Splash manages to compete successfully as the only Filipino-owned personal care manufacturer in the industry, ranking sixth in overall market share and second only to market leader Unilever Philippines in skin care sales.

Currently, Splash has nine brands each having its own market positioning, consumer proposition and target market. In the exfoliant sub-category, Extraderm and Maxipeel hold a combined 86 percent of the market share while Skinwhite and Biolink dominate the skin whitening category with a 41 percent market share.

Hortaleza said funding for the company’s expansion would come from its planned initial public offering (IPO) of 223.85 million shares, estimated to generate between P1.95 billion and P2.5 billion in additional capital.

He said the company is looking at a Nov. 16 listing date but noted that this is tentative and dependent on market conditions.

The shares will be offered to the public at a price range of P8.70 to P11.18 each share. Of the total shares to be issued, 188.85 million will be sold through the IPO while the balance of 35 million will be issued by Splash Holdings Inc. through a secondary offer.

SB Capital Investment Corp. and First Metro Investment Corp. have been tapped as lead underwriters for the planned IPO.

The company’s state-of-the-art manufacturing facility, located in a two-hectare property in Canumay, Valenzuela City, supports the group’s expansion activities both locally and internationally.

Splash aims to have at least two years worth of new products in the pipeline, at any given time.  It intends to develop new and innovative organic or natural-based products to broaden and diversify its portfolio mix.

Aside from nationwide distribution in the Philippines, Splash products are sold in more than 20 countries across North America, Europe, Asia and the Middle East.  Export sales contribute 10 percent to the company’s revenues.

For the first half of this year, Splash posted a net profit of P144 million or an increase of more than 14 times the previous level’s P10.23 million, mainly due to new product offerings and improvements of supply chain efficiencies.