Philippines’ Metro Retail IPO priced below guidance

Philippine supermarket and department store chain Metro Retail Stores Group Inc said its initial public offering (IPO) was priced at a steep discount of 35 percent due to market volatility, cutting the expected proceeds from its listing to $86 million.

The offer price was set at 3.99 pesos each, down by a third from the guidance of 6.10 pesos, said Reginaldo Cariaso, chief operating officer of underwriter BPI Capital Corp.

Metro Retail is now expected to raise 4 billion pesos ($85.58 million) through the sale of 1 billion shares, including the over-allotment option of up to 92 million shares, to fund its store expansion programme. The company would have raised 6.17 billion pesos as per earlier guidance.

Only two firms have debuted on the Philippine Stock Exchange this year, raising a total of 1.77 billion pesos ($37.87 million) as markets reel from volatility and investors seek clarity on the next move by the U.S. Federal Reserve.

“We had strong interest from domestic and international investors but given that markets are very volatile, there was price sensitivity,” Cariaso said.

Metro Retail’s price-to-earnings (PE) ratio of 15 times was more attractive than its peers, Cariaso said.

Retail chains Puregold Price Club Inc and Robinsons Retail Holdings Inc traded at more than 20 times PE multiples on Wednesday.

Listing is scheduled for Nov. 24. BPI Capital and Deutsche Bank are the joint global coordinators and lead underwriters of the IPO. ($1 = 46.7400 Philippine pesos)