Shell finalizes P29.7-b IPO

Pilipinas Shell Petroleum Corp., a unit of Royal Dutch Shell Plc., plans to raise up to P29.7 billion from an initial public offering, which is expected to be one of the largest fund-raising activities in the stock market, investment banking sources said Monday.

Documents obtained by Manila Standard showed Pilipinas Shell would sell up to 300 million primary and secondary shares, with an option for another 30 million shares in case of over allotment. The shares will be offered at P90 apiece in November.

Documents showed of the 300 million firm offer shares, 270 million would be secondary shares to be sold by selling shareholders, including Shell Overseas Investments B.V., The Insular Life Assurance Co. Ltd. and Spathodea Campanulata Inc.  Only 30 million will be primary shares.

This means the selling shareholders will receive P26.48 billion in net proceeds from the IPO, while the company will get P2.7 billion, which will be used to fund capital expenditures, working capital, other working capital and general corporate expenses.

The offer shares will represent 18.6 percent of the company’s outstanding capital stock.

Pilipinas Shell hired J.P. Morgan as the global and international book runner while BPI Capital Corp. is the domestic lead underwriter and domestic book runner.

Rothschild was tapped as the financial adviser. Offer period for the IPO was tentatively set on Oct. 26 to Nov. 3, while listing date was set on Nov. 10.

Pilipinas Shell’s planned share sale is in compliance with the Oil Deregulation Law of 1998, requiring oil refiners to list at least 10 percent of their shares in the local stock market.

The oil firm’s IPO was delayed for more than a decade amid unfavorable market condition, low oil prices and regulatory issues in the previous years.

Pilipinas Shell has the second largest share in terms of volume of fuel sold in the domestic retail fuel market, at around 29 percent based on industry data.

Pilipinas Shell had 996 retail service stations across the country as of end-June.

Pilipinas Shell owns a 110,000-barrel-per-day refinery in Batangas, which recently underwent an upgrade to deliver Euro 4 compliant fuels. It is one of the only two integrated refining and marketing companies in the Philippines.

Pilipinas Shell will be the third company to conduct an IPO this year. The first two were Golden Haven Memorial Parks Inc. and Cemex Holdings Philippines Inc.

Among the largest IPOs conducted in the PSE were those of Robinsons Retail Holdings Inc., SM Investments Corp., Cemex Holdings Inc. and Cebu Air Inc.