Haunted by market volatility, Del Monte delays local unit’s IPO anew

MANILA, Philippines — Once again, Del Monte Pacific Ltd. is pushing back the much-awaited maiden share sale of its Philippine subsidiary for the same reason it did three years ago: a volatile market condition.

In a disclosure to the stock exchange on Wednesday, the listed canned fruit manufacturer said it decided to delay the P44.07-billion initial public offering of its subsidiary, Del Monte Philippines Inc., due to “adverse market conditions.”

The announcement sent the company’s shares crashing. As of 10:08 a.m., Del Monte Pacific is trading down 10%, bucking small gains in the main index.

Del Monte Pacific did not disclose when it would resume its plan, saying it would “make further announcements as appropriate.” But the company said it “remains committed” to listing Del Monte Philippines on the Philippine Stock Exchange.

“Amidst a surge of COVID-19 cases in the Philippines and in the region, the PSE has been highly volatile in recent weeks, and the Board believes that it is in the best interests of the Company, its shareholders and potential investors to defer the listing until conditions improve,” Del Monte Pacific said.

The main index has been see-sawing between gains and losses recently as investors watch out for the economic impact of new lockdowns in Metro Manila, which is seeing a renewed surge of infections believed to be fueled by the highly contagious Delta variant. Since the beginning of the year, the local bourse has lost 8.9%.

The pandemic is bringing back painful memories to Del Monte Pacific which, in 2018, deferred the stock market debut of its local subsidiary twice due to turbulent market conditions at the time. Del Monte Pacific only revived the IPO plan in late April this year, in hopes of raising cash to pay old debts as well as redeem certain preferred shares and provide general budgetary support to the company.

Del Monte Philippines was supposed to conduct the IPO from August 9 to 13 and debut on the PSE on August 23, with a plan to sell 699.3 million secondary common shares to the public for the first time at a price of P54.80 each. There was an overallotment option of up to 104.9 million shares in case of robust investor demand.

Del Monte Philippines’ balance sheet remained healthy despite the coronavirus onslaught. The company netted P4.6 billion in fiscal year 2021 ending April, up 33% year-on-year. Much of the lift came from 8% annual increase in sales to P34.5 billion, close to two-thirds of which was generated onshore while the rest was from international markets.

"During this time, the Company will continue discussions with potential investors and strategic partners that have expressed interest during the IPO process," Del Monte Pacific said.