LT Group raises P38B in biggest follow-on share sale

MANILA, Philippines - The investment holding firm of the country’s second-richest man Lucio Tan has secured roughly P38 billion in the largest follow-on share sale of a Philippine company.

The fresh capital will allow LT Group Inc. to support the organic expansion of its property, liquor and banking units while paying existing debts.

LT Group said it priced the shares for sale at P20.50, the upper end of the P18.50-P20.50 guidance set last week. The conglomerate is selling 1.84 billion shares, including the over-allotment option, allowing it to raise P37.72 billion.

“The offering breaks new ground for the Philippine capital markets, representing the largest equity raising from public markets, the largest initial public offering (IPO) or re-IPO ever completed in the Philippines, as well as the largest ever book of demand for a Philippine equity offering,” said UBS Investment Philippines managing director Lauro C. Baja III. UBS was the sole global coordinator and sole bookrunner of the share sale.

It broke the previous record set by SM Investments Corp. that raised P28.75 billion during its IPO in 2005.

“This offering validates LT Group’s position as a leading conglomerate in the Philippines. We look forward to the next stage of LT Group’s evolution as a listed company,” said Tan, LT Group chairman and CEO.

“This is a testament to the positive long-term outlook on the Philippine economy and we remain fully committed to support the continuous growth of our country and LT Group,” company president Michael G. Tan added.

The transaction was seven times oversubscribed, with 11 global long-term investors committing to buy around one billion shares even before the bookbuilding period, LT Group said.

In terms of geographical distribution, 42 percent of the investors came from Asia, 23 percent from Europe and 36 percent from the US, Baja said.

Long-term global institutional investors accounted for 82 percent of the transaction, followed by hedge funds and private banks at 18 percent.

LT Group conducted a global roadshow covering the Philippines, Hong Kong, Singapore, London, New York and Boston.

The conglomerate, which tapped Credit Suisse, Deutsche Bank and JP Morgan as co-lead managers, said the offering generated participation from more than 130 institutional accounts.

LT Group said around 35 percent of the proceeds will be used “for organic growth initiatives at Asia Brewery Inc., Tanduay Distillers Inc. and Eton Properties Philippines Inc.”

Around 30 percent will be used “to support growth of the company’s banking business” and another 30 percent for repayment existing debts while the remaining funds will be allotted for general corporate purposes.

Under the top-up equity offering, principal shareholder Tangent Holdings Corp. sold the 1.84 billion shares. It will then subscribe to the same number of new shares to be issued by LT Group.

LT Group serves as the umbrella company for Tan’s various businesses that also includes Fortune Tobacco Corp.

The consolidation program last year aligned all of Tan’s assets under one roof, allowing the group to leverage emerging opportunities in different sectors and provide better realization of value for investors.

The net income of the LT Group climbed 29 percent to P7.51 billion in 2012 from P5.82 billion a year ago.