Cebu retail giant debuts in PSE

MAKATI CITY, Philippines – Cebu-based retailer Metro Retail Stores Group Inc. (MRSGI) has debuted on the Philippine Stock Exchange, gearing up for its store network expansion in the country in the next five years.

Yesterday, Metro Retail Chairman and Chief Executive Officer Frank S. Gaisano led the ringing of the PSE bell to mark the company’s  initial public offering (IPO) listing, raising as much as P3.6 billion for the firm’s expansion program.

Company officials announced that around 50 to 70 stores are eyed to be built in the next five years, targeting to hit nearly 100 stores by that time.

Aside from store expansion, the Cebu retail giant is also building up its distribution and logistics facilities with the issuance of 905.4 million primary shares in its maiden share sale.

“Our decision to list on PSE, despite the challenging economic environment, reflects our confidence in the Philippine capital markets,” Gaisano told journalists in a press conference at the PSE yesterday.

“The Philippine economy is one of the least vulnerable among emerging economies and that it continues to enjoy good prospects,” the CEO said. “We look to leverage on this positive sentiment in our economy.”

Metro’s entry into the market, Gaisano said, will further sustain dynamism in the Philippine retail industry.

“We proceed the bold move to list, notwithstanding the volatile and unpredictable market, because we feel that investors will always find value in the strength of the local retail market,” said Sherisa Nuesa, senior board adviser of MRSGI.

Gaisano explained going public is not just a financial objective but also a strategic plan that will enable the company to boost margins and operating efficiency, protect market share and create value for its investors.

Metro Retail is so far the third company to join the PSE this year after SBS Philippines Corp. and Crown Asia Chemicals Corp.

Metro, the retail arm of Vicsal Development Corp., is looking to build at least 5-10 stores a year. For next year, it is targeting to build at least seven in different areas.

In the next 12 months, Gaisano said that about 80% of its store expansion will be concentrated in the Visayas, noting the penetration of modern retail in the region is still low.

When asked about possible expansion overseas, Gaisano said it’s not yet planned by the company as it still has many stores to open in the Philippines.

Metro Vice President for Business Development Joseph Conrad M. Balatbat said about 67% of the net proceeds from the IPO will fund the firm’s expansion plan while the rest will be used for mergers and acquisitions.

Nuesa also said MRSGI has a good mix of local and international investors in its maiden share offering, plus a good mix of retail and institutional investors. She, however, added: “This is a domestic-led offering.”

Gaisano said they had received positive response from both local and international investors ahead of their listing.

It can be remembered MRSGI had reduced the offer size of its IPO despite strong demand for its shares. Metro Retail priced its IPO at a discount of 35% to P3.99 per share due to volatile market conditions.

Moreover, now with its expansion, Gaisano said that Metro is ready to compete with other industry players.

Metro currently operates 46 stores in key cities in the Visayas, Central Luzon, National Capital Region, Calabarzon and Bicol region.

Citing data from Euromonitor, Metro said it is the largest department store and hypermarket store operator and second largest supermarket operator in Visayas in 2014 in terms of retail sales value.

Nationwide, it is the third largest supermarket and department store operator and fourth largest hypermarket operator in 2014 in terms of retail sales.

The Gaisano family’s retail operations started in 1982 when it opened its first store in Colon Street, Cebu City. (FREEMAN)