SL Agritech defers IPO plan indefinitely

MANILA, Philippines - SL Agritech Corp. is indefinitely putting off its plan to do an initial public offering (IPO) due to unstable market conditions.

SLAC president and chief executive officer Henry Lim Bon Liong said he is thinking of scrapping the IPO plan altogether as the firm is now generating enough income to stand on its own.

At the same time, Lim expressed ambivalence about having to deal with investors if SLAC does list in the local bourse.

“I don’t like having to deal with so many phone calls from investors and the Philippine Stock Exchange regarding every new development or move I make,” Lim said.

Nevertheless, he is still not closed to the idea of doing an IPO – just not at the moment due to unstable market conditions.

Lim pointed out the wide market swings that affected listed firm Agri Nurture, Inc. (ANI).

He said SLAC is beginning to benefit from its decision to transfer its seed production operations abroad – particularly to Indonesia and Bangladesh, soon to Vietnam and possibly to Cambodia, Myanmar and Brunei.

From an initial production of 69 tons in 2009, rice seed production in Bangladesh has increased to 400 tons in 2010 and up to 700 tons this year.

For next year, seed production in Bangladesh is expected to increase to 1,200 tons.

Under the planned expanded production, seed production is targeted to reach 5,000 tons from 2013 to 2014.

SLAC earns royalties from the sale of its hybrid rice seed to Bangladeshi farmers. The Bangladeshi government sells SLAC’s hybrid rice variety SL8H at $3 per kilo, but Lim would not say how much of that he gets in terms of royalty.

SLAC exported 300 tons of hybrid rice seeds to Vietnam this year, and the volume will increase to 1,000 tons next year and to 2,500 tons by 2013.

Lim said it will not be long before SLAC starts producing hybrid rice seeds in Vietnam. That means SLAC seed production in the Philippines would be for the country’s own requirements.

According to Lim, Cambodia has also expressed interest in a possible rice seed production tie-up with SLAC.

He said Cambodia wants to import an initial 200 tons of hybrid rice seeds for planting, eventually ramping it up to 1,000 tons and then to 2,000 tons.

However, Lim said, SLAC may not be able to export that much hybrid seeds as it has to keep its local production for Filipino rice farmers. As such, SLAC may opt to eventually produce hybrid rice seeds in Cambodia.

Even Brunei and Myanmar, Lim said, have approached him about helping them develop their own hybrid rice program.

In Brunei, Lim said, the Mashor Group has expressed interest in working with SLAC.