Figaro bucks stock market downturn during 'warm' IPO

MANILA, Philippines — Investor interest in the maiden share sale of Figaro Coffee Group Inc. proved strong after the company outperformed the local bourse during its stock market debut on Monday.

Shares in Figaro — the first retail food service company to go public since Fruitas in 2019 — rallied as high as 18.6% on its listing day before paring those gains to close at P0.77 each, up 2.67%.

It was nevertheless an impressive performance that defied a 0.56% drop in the main index. For Luis Limlingan, head of sales at local brokerage Regina Capital, Figaro could have had a stronger finish if the market was in a good shape.

"It was a relatively warm reception for Figaro given that most of the session it was trading above 80 cents, and closed at 77 cents only because of profit-taking," Limlingan said in a Viber exchange.

"Given that the PSEi closed in the red, and the US markets have been experiencing a huge selloff, the stock could have performed better under normal circumstances," he added.

Figaro’s initial public offering involved the sale of 930.2 million common shares sold at a reduced price of P0.75 each. Including the over-allotment option of up to 93 million shares, the company was expected to rake in P767.4 million in proceeds from the IPO.

Figaro would use the cash it raised to build 61 stores over the next three years. Most of these new stores would be the popular pizza brand Angel’s Pizza and The Figaro Group Express. Aside from the two brands, the food service retailer also owns Taiwanese restaurant Tien Ma's.

April Lee Tan, head of research for COL Financial, believes Figaro’s discounted IPO price and the strong performance of its Angel’s Pizza brand — which will benefit the most from the fundraising activity — likely stoked strong investor interest for the offer.

“It was sold at a reasonable valuation,” Tan said.

Apart from growing its store network, Figaro would also use parts of the proceeds to fund commissary expansion while the rest would be allocated for store renovations and debt repayments.