The IPO spin-off of Del Monte Pacific’s [DELM 13.68 10.00%] PH-based subsidiary, Del Monte Philippines [DMPI 54.80], has been officially “deferred” by DELM’s board of directors after “consultation with its advisors”.
DMPI’s offer period was supposed to start in just under two weeks, with the IPO itself scheduled to happen on August 27. It’s theoretically possible for DELM to revive the IPO in short order if conditions were to drastically improve for some reason or another, but the board declined to give any timeline guidance as to the rescheduling of the offer period and IPO date, so it seems unlikely that anything will happen in the very near future.
The DELM board said that it was still committed to listing DMPI, that it still believes in the “growth and resiliency” of DMPI, and that it will continue talking with “potential investors and strategic partners that have expressed interest during the IPO process” and provide updates “as appropriate”.
MB BOTTOM-LINE
I feel like this statement reads quite ominously for the DMPI IPO. Deferrals are nothing new, and we’ve seen several firms do this through the years. Though, I will say that it’s been my recent experience that deferred IPOs tend not to get resuscitated.
I’m not dishing out some hot take that DELM is about to drop the IPO option like a heavy tin of diced pineapple, but just that as these things go, more often than not, the inputs that make a board decide to not go forward with an IPO also keep the board from re-engaging with the option in the short or medium term. At least that’s how it worked the last time DELM decided to defer its IPO of DMPI, which it did back in 2018 for because of “weak market conditions”. At that time, the PSE had fallen to the 7,500 level after hitting a peak of 9,000 four and a half months earlier.
This time around, the DELM board decided to defer its 2021 IPO of DMPI for “volatile market conditions” where the PSE had fallen to the 6,500 level after hitting a peak of 7,300 seven months earlier. Sound familiar? DELM feels like a fairweather IPO friend that is in no hurry to part with its profitable asset. Besides, there are plenty of recent IPOs that have demonstrated that it’s possible to conduct a successful IPO during a lockdown. Monde Nissin [MONDE 15.58 3.87%] conducted its pre-IPO offer period during Metro Manila’s MECQ, and its June IPO during the subsequent GCQ. DDMP [DDMPR 1.82 2.82%] conducted its IPO during the earlier GCQ in March. MerryMart [MM 3.66 8.93%] conducted its IPO under GCQ in June of 2020.
If DELM wanted to, it could easily push forward with the IPO. Perhaps the line about talking with strategic investors was triggered by a conversation that DELM had with some possible big-time investor(s) during the pre-IPO phase that presented a cheaper and cleaner way of raising the same or similar amount of equity? Sort of the way Metro Pacific Investments [MPI 3.64 1.11%] made a ton of noise about listing its MPI Hospitals unit before selling a massive stake to US-based private equity firm KKR in 2019. We shall see. Maybe DELM’s just not that into us.
--
Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.