Metro Retail Group sets IPO price at P3.99/share

CEBU, Philippines - Cebu-based Metro Retail Stores Group Inc. (MRSGI) has set the final office price of its initial public offering (IPO) at P3.99 per share due to market volatilities.

Reginaldo Cariaso, chief operating officer of BPI Capital Corp., told reporters yesterday the change in the offer price was due to "market feedback and conditions."

BPI Capital and Deutsche Bank A.G. are the company's lead underwriters of the offer.

The Cebu retailer is set to raise P4.04 billion from its maiden share sale, down from its initial target to raise P6.17 billion. The company initially set its offer price at P6.10 per price.

The Gaisano-led retailer is selling up to 920 million primary shares and 92 million secondary shares.

In an interview at the sidelines of the firm's investor briefing yesterday in Cebu City, Metro Retail Chairman and Chief Executive Officer Frank S. Gaisano said the company can still use its credit lines to support its expansion plan despite the reduced share price.

"We're still very much under leverage," Gaisano told reporters.

In a letter to the Philippine Stock Exchange, Gaisano said the firm has met a significant number of institutional investors in Hong Kong, Singapore and Manila amid the book building process.

Book building is a process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors.

"We are pleased with the high level of interest in the offering, and the subsequent participation from both domestic and international investors in the institutional tranche of our offer," Gaisano noted in the letter.

"Given the recent global market volatility, the positive outcome of the book building was a welcome development," the executive added.

Once MRSGI gets its permit to sell from the Securities and Exchange Commission, Gaisano said it expects to begin receiving subscriptions for the IPO that can accelerate its expansion plan.

The offer period will start from Nov. 9-13.

Metro Retail will use the trading symbol "MRSGI" once its shares are listed on the Main Board of the PSE on Nov. 24.

The CEO said net proceeds from the IPO will fund the company's store network expansion, building of consolidated logistics and distribution center and working capital requirements.

Gaisano also disclosed yesterday the multi-format retailer is planning to build seven more stores in 2016 through the first quarter of 2017 in various parts in the country.

Currently the Cebu retailer's store network across the country stands at 46 in three formats: supermarket, hypermarket and department store.  (FREEMAN)