Globe Asiatique listing to break prolonged IPO lull

MANILA, Philippines - The planned initial public offering (IPO) of property developer Globe Asiatique Realty Holdings Corp. this quarter will break a nearly two-year lull in major listings at the local stock market.

The company, owned by the family of businessman Delfin Lee, plans to sell between 15-26 percent of its outstanding capital to generate as much as P3 billion in gross proceeds. It is currently awaiting the Securities and Exchange Commission approval of its IPO registration filed late last year.

“So far, so good. We’re seeing encouraging signs our IPO would be a successful one,” Lee told The STAR yesterday.

Astro del Castillo, managing director of investment advisory firm First Grade Holdings, said the solid fundamentals of Globe Asiatique – a strong player in a niche market, excellent management team, a proven track record of profitability – makes it a “potential new gem in the market.”

“It’s a company worth looking into. They’re delivering good products and they’re filling in the huge gap in the country’s housing sector, particularly the low-cost segment. I think this company should be on the radar screen of investors in the stock market,” he pointed out.

He also credited Lee and his family for their willingness to open up their company to other investors, and braving a highly volatile equities market which has led a number of companies to defer earlier announced plans to list their stocks.

Ed Francisco, president of BDO Capital & Investment Corp., the issue manager and lead undewriter, said the IPO market, which ground to a halt in the middle of 2008, is expected to stage a revival this year as market conditions improve along with the anticipated recovery of the domestic economy.

Based on PSE data, the last major IPO was that of beer giant San Miguel Brewery which raised P25 billion in fresh capital in May 2008. Software developer

Ripple E-Business International was the lone IPO entrant in 2009, but the company was listed at the Small and Medium Enterprise (SME) Board, grossing P17 million from the offering last September.

While two other companies were actually listed last year - AgriNurture Inc. and Century Peak Metals Holdings Corp. - both did so by way of introductory listing, a process which involve listing their shares directly, or without going through an IPO.

Last month, Ayala-owned electronics unit Integrated Micro-Electronics Inc. likewise entered the stock market through an introductory listing at the main board of the PSE.

An investment analyst in one of the biggest investment houses in the country said Globe Asiatique’s IPO is seen to test investors’ appetite for such offerings, as fund managers increasingly turn to a reinvigorated bond market amid a weak equities front.

“The market’s highly liquid but investors can’t seem to shake off the stigma of the stock market freefall due to the global credit crisis, hence they are turning to the more stable bond market,” he noted.

He added investors are also wary of the results of the national elections in May, maintaining a wait-and-see stance before actively plunging back into the stock market.

Despite these concerns, Lee said they are pushing through with the IPO, which they had planned about five years ago, so that investors could take part in a company built on solid grounds and with a still tremendous upside for future growth.

“The company has such strong fundamentals that even in a bearish market others dared not to enter, it could fly,” the investment analyst said.

Dexter Lee, the company’s executive vice president and a former stock market analyst himself, said the price of the share offer - between P6.50 to P10 each - translates to a price/earnings (P/E) ratio of about seven to 11 times, lower than the industry average of 10 to 12 times, making the issue an attractive one.

The P/E ratio is used to compare the valuation of companies: a higher ratio means that investors are paying more for each unit of net income so that stock is considered more expensive compared to one with a lower P/E ratio.

In its IPO application, Globe Asiatique said it will offer a total of 170.4 million common shares (136.36 million primary and 34.09 million secondary) with an over-allotment option of up to 168.71 million shares.

Proceeds from the share sale will fund the development of the company’s housing projects on a wider, nationwide scale.

Globe Asiatique is a leading developer of mass housing communities and a prominent player in the high-rise residential condominium market. It is the company behind groundbreaking projects such as St. Monique Valais in Binangonan, Rizal; Xevera in Bacolor and Mabalacat towns in Pampanga; Casa Ibiza in Antipolo; The Enclave in Angeles City; Chateau Valenzuela; GA Twin Towers in Madaluyong; and the 38-storey GA Sky Suites in Quezon Avenue - soon to rise as the tallest building along EDSA.

The company is set to launch more projects soon, including The Courtyard, the New Sta. Rosa Homes in Laguna, Sameerah in Angeles City, and Xevera Neo-Calapan in Mindoro.

In the nine months ending September 2009, Globe Asiatique posted a net income of P300.1 million, 40 percent higher than its earnings a year earlier, on revenues of P3.02 billion.