Megawide IPO oversubscribed

MANILA, Philippines -  Bucking the generally bearish market sentiment, fast-growing construction and engineering firm Megawide Corp.’s initial public offering was oversubscribed three times, its lead underwriter and financial advisor said on Friday after the offering closed.

Ed Francisco, president of BDO Capital & Investments Corp., said the firm received offers in excess of P5 billion compared to the P2.29 billion on offer.

Of the expected P2.3-billion proceeds, P1.3 billion came from the Sy family which acquired 64 percent of the 292 million shares offered to the public, giving them a 20 percent stake in the construction firm.

Megawide, the first company to go public this year, sold its shares at P7.84, the high end of its indicative price range on strong demand for the issue.

“We didn’t expect this spectacular turnout. The demand was just strong that we had to turn down requests. This issue attracted several financial institutions and big corporate groups,” Francisco said.

Nevertheless, Francisco is hopeful that the issue would do well on its listing day, scheduled this Friday. “Hope the price will stay at least P7.84. investors should hold on to shares and not just sell immediately upon listing. Value will improve more by holding and watching the company grow,” he said.

Megawide intends to use proceeds from the offering to fund the construction of a P1-billion state-of-the art pre-cast concrete plant in Taytay, Rizal which will allow it to engage in mid-rise buildings and socialized housing, expand its coverage and services to road and mass transportation infrastructure.

Development of the plant is slated this year with the completion expected sometime in 2013.

Other proceeds will be used to acquire new tower cranes and other earth moving equipment as well as for working capital requirements.

Owned by civil engineers Michael Cosiquien and Edgar Saavedra, Megawide is an emerging leader in the local construction industry, logging in 26 construction contracts with a total value of P22.9 billion. The firm has completed numerous low-rise to high-rise condominiums and industrial buildings, including the Antel Spa Residences, Citysquare Residences, Bellevue Hotel, Hotel Kimberly Tagaytay, Millenia Tower and Parcvue Hotel. 

Among the company’s current projects include SM Development Corp.’s Grass Residences, Sea Residences, Berkeley Residences and Jazz Residences condominium projects, Belle Corp.’s Belle Hotel Casino, Ground 18 Realty Corp.’s Bench Corporate Office Building and Prince Jun Development Corp.’s University Tower Malate and University Tower II.

Megawide, the major contractor of retail tycoon Henry Sy’s real estate development arm SM Development Corp., is forecast to post a net income of as much as P800 million this year, or more than double the P320 million reported in 2010. The company had a backlog of P15.4 billion worth of orders as of Sept. 30 last year.