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Stock Commentary

Medilines institutional offer 2.7x oversubscribed

Merkado Barkada
Medilines institutional offer 2.7x oversubscribed

The next IPO on the list is Medilines Distributors [MEDIC 2.30 pre-IPO], the medical services company owned by Manny Villar’s brother, Virgilio. A story from last week quoted “market sources” as saying that the “institutional portion” of the IPO was 2.7x oversubscribed, but we’ve heard nothing about the take-up of the offer since then.

For background, on how to consume this info, consider that an IPO is not just one massive pile of shares that we all grab from in a free-for-all, it’s technically split into different “buckets”. For MEDIC, the total number of shares on offer is 825 million, with 70% of that (577.5 million) going to “institutional investors”, 20% (165 million) going to “Trading Participants” (that’s PSE-speak for “brokers”), and 10% going to “local small investors” (that’s also PSE-speak, but this time for the PSE EASy program).

Technically, it’s possible for an IPO to be “oversubscribed” if demand for the stock exceeds supply in any of these buckets. So far, that’s what we have here: the institutional bucket is oversubscribed, but we’ve heard nothing about the other buckets.

MB BOTTOM-LINE

It feels like institutional demand for MEDIC’s offering would be high; that kind of makes intuitive sense, though I have nothing to base that on except for a general perception in the investment world that medical-related companies are a desirable investment. That said, it’s interesting that we’ve heard nothing about the PSE EASy bucket, or any of the many “sub-buckets” that the broker bucket gets split into (each broker gets an allocation).

Technically it’s possible for a single broker to become oversubscribed, and usually it’s the broker associated with the underwriter/bookrunner that crows loudly about being oversold. Here, I haven’t seen anything from MEDIC’s underwriter/bookrunner, PNB Capital, which is a firm that would ordinarily not feel shy about getting in the press to talk up their own book. MEDIC’s IPO is next week, so maybe we’ll get a small flurry of articles over the weekend to try and pump up retail interest. Just something to watch for.

 

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
INITIAL PUBLIC OFFERING MEDILINES DISTRIBUTORS INC PHILIPPINE STOCK EXCHANGE
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