The Philippines’ largest IPO of 2014 was also one of the most textbook examples in the region. High-end retailer SSI Group attracted a high valuation – in a week when two other deals in the region were downsized, no less – and performed well, highlighting the successful execution of the Ps7.5bn (US$166m) IPO.
SSI came to market in October, when things had turned edgy on concerns over the global economy and the outbreak of the Ebola virus.
During the week that SSI was on the road, two other high-profile equity issues in South-East Asia were having a rough time, with both taxi operator Blue Bird and internet service provider Link Net being forced to scale back their IPOs.
Against such a backdrop, SSI’s success in pricing at the top of its target range was a clear example of the IPO’s appeal. It was covered on the first day of bookbuilding and was priced at the top of the Ps7.00–Ps7.50 indicative range, translating into a 2015 price-to-earnings multiple of 20.2.
The final price represents a tight discount of around 4% to the average forecast earnings of three closest listed comparables, but marketing efforts helped position SSI as a leading consumer play in a country that is enjoying strong economic growth.
Scarcity value proved another attraction, as the IPO was launched during a quieter year for major Philippines listings. SSI’s eye-catching line-up of brands had immediately drawn investors’ attention to the IPO, even though the company did not belong to any of the traditional big business families in the Philippines.
SSI is the leading specialty retailer of international brands in Philippines and has a network of 655 stores and 103 brands, including Hermes, Gucci and Zara. The Tantoco family, founders of the Rustan’s department store chain, owns the company.
The fact that the SSI float managed to firm up cornerstone commitments from high-quality investors also helped drive momentum.
Around 39% of the base offer went to six cornerstone investors, namely Capital Research, Macquarie Funds, BPI Asset Management, Government Service Insurance System, Havenport Asset Management and York Capital.
Among them, local institutions BPI and GSIS were participating as cornerstone investors for the first time.
SSI’s trading debut did not disappoint, as its shares closed 6.54% above the IPO price. As of November 28, the stock was 16% above the issue price.
The SSI float comprised 864.2m shares, of which 695.7m were primary and 168.5m secondary. There was a greenshoe option of 129.6m shares, which was fully exercised.
BPI Capital, Credit Suisse and HSBC were the joint global co-ordinators.
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