Robinsons Retail banks on P32-B IPO to boost nationwide store network

MANILA, Philippines - The Gokongwei family’s Robinsons Retail Holdings Inc. is set to ride the strong growth of the country’s retail sector, backed by its initial public offering (IPO) that can generate as much as P32 billion in fresh capital.

The Philippines’ second largest multi-format retailer targets to end next year with 1,400 stores nationwide from more than 900 stores at present, company executives said.

“We feel the entire Philippine retail opportunity to be attractive due to continued growth in the economy and the growing middle class,” said Robinsons Retail vice-chairman Lance Gokongwei.

He said the sector intends to benefit from the consolidation of the retail sector and the continuous growth of disposable income and the middle class.

“The primary goal of Robinsons Retail is to strengthen our market leadership through disciplined and strategic store expansion nationwide and by leveraging on the multi-format platform,” said Robinsons Supermarket general manager Justiniano Gadia.

Robinsons Retail will become the sixth firm to hold an IPO at the stock exchange this year.

“Offer price range has been set at P55 to P66 per share for an offer size of P26.7 billion to P32 billion,” said Denis Du, executive director of issue underwriter Maybank ATR Kim Eng Capital. The indicative price is lower than the previous maximum price of P86.64 per share.

Robinsons Retail will sell 484.75 million shares, including the over-allotment option of 22.85 million shares, from Oct. 29 to Nov. 5. The shares will be listed on Nov. 11.

The offer price will be finalized on Oct. 25 after roadshows in Hong Kong, Singapore, New York and Boston.

“The current price range already has the benefit of price discovery,” said Bach Johann Sebastian, Robinsons Retail’s senior vice-president and chief strategist. He said the valuation is in line with other regional listed retail firms like Dairy Farm, Matahari, Hero and Puregold.

Given the IPO, the company is primed to expand its footprint nationwide.

Robinsons Retail aims to end 2014 with 1,400 stores across all formats. As of end-September, the company had 982 stores, which will increase to 1,036 by end-2013.

“More than half of 400 [new stores] are convenience stores and drug stores,” Sebastian said.

Gokongwei said the firm is expanding in Visayas and Mindanao, which so far account for 10 percent of the company’s stores. Bulk of Robinsons Retail’s multi-format branches are located in Metro Manila and Luzon.

It will also venture into home furniture, sporting goods, school and office supply, and coffee shops.

Robinsons Retail president and chief operating officer Robina Gokongwei-Pe said the company is banking on its diversified format and nationwide presence, market leading brands, large scale operations, proven track record, strong infrastructure and advanced IT systems, highly experienced management and strategic relationship with mall affiliate Robinsons Land Corp.

As of end-June, the company had 75 Robinsons Supermarkets, 36 Robinsons Department Stores, 114 Handyman, True Value and Howards do-it-yourself stores, 345 Mini Stop convenience stores, 223 South Star drug stores, and 147 specialty stores.

Aside from retail, the Gokongwei family is also into budget airline (Cebu Pacific), banking (Robinsons Bank Corp.), property (Robinsons Land), petrochemicals (JG Summit Petrochemicals Corp.), and snacks and beverage (Universal Robina Corp.).