Record breaker
Monde Nissin’s mix of resilient and high-growth businesses helped it to complete the Philippines’ largest IPO at Ps55.9bn (US$1.2bn), drawing international investor attention.
The food producer also broke the jinx of recent large Philippine IPOs and re-IPOs not trading well, with the shares ending the year up 20% from the issue price of Ps13.50.
The IPO comprised 3.6bn new shares with an overallotment option of up to 540m shares which was fully exercised. The shares sold represented 23% of the capital.
Monde Nissin had twin advantages. Demand for its well-known Lucky Me noodles and Nissin biscuits businesses, which together contributed around three-quarters of net sales in 2020, grew during the pandemic as consumers stocked up on food with a long shelf life. Institutional investors also liked the company’s Quorn meat alternative business for its growth potential and ESG angle as more consumers look for vegetarian options.
Despite the strong profile, the company had to earn investor confidence, since the family behind the group had never listed a company before. Monde Nissin president Betty Ang co-founded the company in 1979, and she and her family members are the major shareholders.
Monde Nissin was able to command a premium despite being launched at the peak of the second Covid-19 pandemic wave in Asia, against a weak stock market and selling by foreign investors. The issue price translated into a 2022 price to earnings multiple of 21.5 versus the industry average of 20.
Institutions showed confidence in the deal with cornerstone investors including AIA, Capital Group and GIC Private buying shares totalling Ps32.6bn or 67.1% of the base offer.
Books were multiple times covered with demand from international long-only institutions, domestic investors and hedge funds. Around 100 accounts participated in the transaction including the cornerstone investors. Investors from Asia accounted for 63%, the US 19%, EMEA 11% and local 7%.
Long-only investors bought 76% of the deal and hedge funds 13.5%. The rest was taken up by wealth management clients and other domestic investors.
The IPO proceeds will be used to expand the meat alternative business and repay debt.
Citigroup, JP Morgan and UBS were the joint global coordinators and international bookrunners, while Credit Suisse, Jefferies and Macquarie Capital were the international co-bookrunners. BDO Capital, BPI Capital and First Metro were the local underwriters.
With the successful listing, which beat Cebu Air’s Ps27bn 2010 float to become the country’s largest IPO, a new family has made its presence known in the Philippine capital markets and created wealth for many other shareholders in the process.
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