Nickel Asia sets IPO price at P15

MANILA, Philippines - Nickel Asia Corp., controlled by businessman Manuel Zamora Jr. and Japan’s top nickel producer Sumitomo Metal Mining Co. Ltd., has set the final price for its initial public offering at P15 a share to raise around P4.567 billion.

Nickel Asia’s maiden share sale was priced at the bottom of the indicated range of P14.95 to P23 each share following an international roadshow held last week which saw over 40 investors from Singapore, New York and Boston participating in the issue.

Informed sources said the international tranche of the IPO, amounting to P3.128 billion, was 2.5 times oversubscribed.

 “The demand was oversubscribed even at the high end of the range. But we wanted to make sure there would be a good active market performance so we decided to price it at the lower end,” the source said.

The primary offering involves a total of 304.5 million common shares, including 132.991 million treasury shares.

Around 68.5 percent of the total offer was issued to investors outside the Philippines while the remaining 31.5 percent or 95.917 million shares will be sold locally.

UBS AG and CLSA Ltd. are the joint bookrunners for the issue while ATR Kim-Eng Capital Partners, SB Capital INvestment Corp. and UBS Investments Philippines serve as lead domestic underwriters.

The domestic offering will run from Nov. 9 until Nov. 15 while the shares will be listed on Nov. 22.

Nickel Asia owns majority stakes in six mining operations throughout the Philippines, namely Rio Tuba nickel mining which is located near the southern tip of Palawan island; Taganito mine located in the province of Surigao del Norte, Cagdianao mine in the Dinagat islands province; Taganaan mine which lies approximately 25 kilometers to the east of Suriagao City; and two more.

The company’s principal business involves selling nickel laterite ore to customers in Japan, China and the Philippines.

Nickel Asia has allocated P3.98 billion of the total proceeds for investments in the Taganito high pressure acid leach plant in MindanaoTaganito. It has also set aside P393.63 million for exploration activities.

Around P46.31 million will be spent for acquisition of new properties while the balance will be used to raise the capitalization of Cordillera Exploration Co.

The Taganito mine is one of the priority projects of the government, which aims to to raise $13 billion in investments in the mining industry by 2013.

Zamora owns 23.49 percent of Nickel Asia while Sumitomo Metal holds 18.83 percent. Other shareholders of the nickel company are investment banker Luis Virata with a 13.63 percent stake, Pacific Metals Co. Ltd. (1.13 percent), Mantra Resources (4.27 percent), NI Capital Corp. (2.15 percent).

As of June 30, 2010, Nickel Asia’s net book value (total aasets minus liabilities divided by the total number of shares outstanding) was P14.647 billion or P14.80 per share.

In the six months ending June this year, Nickel Asia’s net earnings amounted to P694.56 million, more than 20 times the P33.3 million reported in the same period a year ago and already exceeding what it reported for the whole of 2009.