Figaro Coffee Group hacks IPO size in half, drops plans for acquisitions
The original deal was for Figaro Coffee Group [FCG 0.75 pre-IPO] to raise nearly P1.75 billion through the sale of 1.365 billion common shares at P1.28/share, with a massive P600 million of that amount earmarked for acquisitions.
The final prospectus, released just before Christmas, shows that the new deal is for FCG to raise only P0.77 billion through the sale of just 1.023 billion shares at P0.75/share.
The set-aside for acquisitions has been removed from the post-IPO plan entirely.
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As I’ve mentioned in previous write-ups, Jerry Liu is no stock market noob. Through his frequent debt and equity deals with the other PSE-based company that he owns, Cirtek [TECH 3.77 0.79%], we can deduce that he probably has a pretty good feel for how to raise money effectively using the public markets.
This isn’t to say that I’m holding up TECH as an example of a well-run company, only that Mr. Liu isn’t likely to push forward with a deal that isn’t optimally advantageous to his own interests like someone might under dire circumstances or the intoxication that comes with all of the attention kicked up by an IPO for a first-time offeror.
Still, regardless of whether Mr Liu is an old hand at this or not, the reduction in the scope of this deal is staggering. Total shares offered is down by 25%, price slashed 41%, and the total deal value is down over 56% from what it was just a couple of weeks ago.
Is this a response to the short-term threat of Omicron to FCG’s business model? An adjustment in light of a weakening market? A pre-emptive cut to prevent another Medilines Distributors [MEDIC 1.29] type of first-day disaster?
Maybe it’s a pragmatic “all of the above”. It will be interesting to see how “retail” picks up on this stock during the offer period that starts next week.
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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.
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