Hybrid rice producer mulls IPO

MANILA, Philippines - Hybrid rice producer SL Agritech Corp. is planning to raise P1 billion to P2 billion from an initial public offering either in the third or fourth quarter this year, chairman and chief executive officer Henry Lim Bon Liong said yesterday.

In an interview with newsmen following a speech before the Rotary Club of Makati at the Manila Peninsula, Lim said the money to be raised from the IPO would be used by SL Agritech for its expansion activities.

 “It is about time we get money from the capital market” as SL Agritech continues with its expansion activities not only in the Philippines, but in other countries as well with the latest being a possible joint venture seed production in India, he said.

The Lim family owns all three million shares of SL Agritech with a par value of P100 per share. For its planned IPO, the company is planning a stock split, expanding the capital to one billion new shares with a par value of P1 per share.

The IPO being considered will be for a minimum of 10 percent and a maximum of 26 percent of the one billion shares.

Pricing is yet to be determined, said Antonio B. Herbosa, managing director of Center for Global Best Practices-corporate finance and consulting.

Herbosa said SL Agritech, being the only company in hybrid rice production, could be priced at 10 times its P.E ratio, depending on market appetite.

SL Agritech, Lim pointed out, currently controls 85 percent of the hybrid rice market.

For its fiscal year ending May 31 this year, SL Agritech is projecting gross revenues of P900 million and a net income of P120 million to P150 billion.

This year’s net income is expected to be double that of the company’s 2009 net income of P70 million.

Lim had said that SL Agritech would hit the P10-billion sales mark by 2015 for its hybrid seeds and rice divisions.

SL Agritech, Lim said, is increasing its seed production in other countries that started in Indonesia. They are now in Bangladesh, he said.