Sta. Lucia Land [SLI] dusts off old follow-on offering plan, ready to try again
Property developer Sta. Lucia Land [SLI 3.05 2.35%], headed and owned by Exequiel Robles and the Robles family, has re-filed its old follow-on offer (FOO) plan (first approved in 2013) with the SEC, seeking to sell 3 billion common shares (2.5 billion firm offer, plus 500 million over-allotment) at a maximum price of P3.29 per share.
That would raise about P9.8 billion in equity for SLI, assuming that the over-allotment shares are sold by SLI (and not some private shareholder, like Mr. Robles), and that all of the shares are sold at the maximum offer price. That is the absolute limit of what we know as this point, but SLI does have a long history of teasing this particular FOO transaction, so we do have some additional information from that earlier attempt that we might be able to use today.
While the original FOO plan was first approved in 2013, SLI didn’t seriously attempt to execute its FOO plan until 2019, just after the Kepwealth [KPPI 5.17 1.37%] IPO exploded and the exchange was gripped with IPO fever. SLI was one of several firms that rushed to get various equity raise processes rolling. In its prospectus, SLI said that the primary purpose of the FOO was to raise money for “strategic landbanking”, which as I noted at the time sounded a whole lot more like a “nice to have” than a “need to have” kind of thing.
But then Axelum Resources [AXLM 2.89 0.70%], the first IPO after the KPPI phenomenon, fell flat on its face and the AllHome [HOME 8.06 1.10%] IPO raised money but didn’t pop, and it just felt like those two disappointments just let all of the air out of the “IPO ALL THE THINGS” balloon all at once. SLI announced that it planned to shelve its FOO due to “market conditions”, and I said that SLI would probably be back with its FOO plan in 2020.
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Well, here we are! I missed by a year in my prediction, but then, I feel like most plans that were scheduled to happen in 2020 were probably kicked down the road a bit.
I’m very curious to get a look at SLI’s prospectus for this iteration of the FOO to see if its primary purpose is still just landbanking, and whether or not the company will provide a better breakdown of its plans for the money. Timing wise, it’s hard to argue with the management team here; the stock is trading at/near an all-time high, and it’s up around 65% in the past year.
But what are we supposed to make of this? From a signal perspective, perhaps SLI’s initial approach to the market is a sign that we could be at a crossroads. The last time SLI approached the PSE in 2019, the broader market was rising with some momentum, but after SLI’s October cancellation of its FOO, the market briefly breached 8,000, and then began to melt away. The quick flash crashes in early 2020 put the market down in 7,200 territory, and then we all know what happened when the realities of COVID started to become more clear. I’m not suggesting SLI as a serious, tried-and-true signal, but I’ll be watching to see if they get nervous again and shelve the FOO once more.
There are two IPOs coming up over the next couple of months (Filinvest REIT [FILRT] and Megaworld REIT [MREIT]) that could embolden SLI or cause the company to lose its nerve (once again) as it did after AXLM and HOME in 2019. I mean, REITs are not really IPO moon rockets anyway, so... maybe the cards are stacked against SLI actually going through with it. We’ll just have to read the prospectus and watch!
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