Last May 30, 2018, Del Monte Philippines Inc. (DMPI) got an approval from the Philippine Stock Exchange (PSE) and Securities and Exchange Commission (SEC) for its Initial Public Offering (IPO) this year. This would be the Philippines’ biggest IPO in 15 months and is considered Southeast Asia’s largest in the food and beverage firm in nearly 6 years.
The IPO was set to happen on May but it was postponed and is now targeted to be on June 25. DMPI is the first to declare an IPO this year edging out Wenceslao by only a few days since the latter is going to conduct its IPO on June 29. It’s said to be valued at P17.55-billion involving 587.43 million secondary shares. The price of the stock is to be pegged at P29.88. The said IPO will create a public float of 21%. BDO Capital & Investment Corp. is the sole issue manager, global coordinator and bookrunner. It will be joined by BPI Capital Corp. and China Bank Capital Corp. as domestic lead underwriters and Nomura Singapore Ltd. and DBS Bank Ltd. as international lead underwriters.
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DMPI has been in operation for over 90 years and it’s now considered as the market leader in the most prominent food and beverage manufacturing firms. It manufactures canned pineapple juice and drinks, canned pineapple and tropical-mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup and is advertised under the Del Monte brand and are then distributed to the Philippine market.
About two-thirds of the DMPI’s sales come from the Philippines and the remaining comes from its export under the S&W brand and private label brand. On a global scale, DMPI is competitive as it is also one of the world’s largest and fully integrated pineapple production companies.
The company claims to have the largest integrated pineapple operation in the world having a 23,000-hectare pineapple plantation in the province of Bukidnon. Aside from its Philippine market, DMPI also supplies to Del Monte Pacific Limited (DMPL) which distributes Del Monte-branded products to several markets in Asia, Europe and America.
DMPL is an investment holding company that has subsidiaries engaged in the manufacturing of packaged fruits and vegetables, canned fish and fresh pineapple, tomato-based products, among others. It is listed both in the PSE and the Singapore Stock Exchange.
With the PSE and SEC approvals, DMPI is now authorized to conduct its IPO. It approved the initial listing of up to 2,797,320,002 common shares. The company is offering 587.4 million common shares at a maximum price of P29.88 apiece. The final price will be announced on June 6. The shares will be offered to investors from June 8 to June18.
The net proceeds of DMPI’s IPO will be utilized by its parent company Del Monte Pacific Ltd. (DMPL) to prepay and repay the loan facilities amounting to P6.8 billion and to settle certain payables totalling to P3.544 billion. P6 billion will refinance certain financial obligations of the DMPL group in order to reduce its leverage position thus strengthening its balance sheet.
As you all knowI am not a big fan of companies who sell secondary shares and who would use majority of the proceeds to pay off debt. I am a big fan of companies who would focus on expansion more than debt.
I hope this helps you!