By Neil Jerome Morales and Anshuman Daga
MANILA/SINGAPORE, Feb 19 (Reuters) - A clutch of Philippine
firms, including newly launched real estate investment trusts
(REITs), could make the country Southeast Asia's biggest IPO
market this year, driven by attractive valuations and a
recovering economy.
Investors and bankers say consumer retailers and REITs are
lining up record fundraisings that could top $4 billion in 2021,
more than the combined tally of the last seven years, according
to Refinitiv data.
Across the rest of the region, only a $2 billion Singapore
IPO by a subsidiary of Thai Beverage, smaller floats in
Indonesia and insurance IPOs in Thailand, are among those lining
up for launches this year.
"We see a confluence of abundant liquidity, recovering macro
fundamentals and relative valuation attractiveness contributing
to the positive investor sentiment towards Southeast Asia IPOs,"
said Martin Siah, Southeast Asia head of corporate and
investment banking at Bank of America Merrill Lynch.
"The strength in global capital markets has made it very
attractive for quality Philippine issuers who have been timing
their eventual IPOs."
A $1.5 billion float by Singapore sovereign fund GIC-backed
Monde Nissin, the company behind the iconic local instant noodle
brand Lucky Me! and meat alternative Quorn, is set to be the
biggest local IPO, sources familiar with the matter said.
Others include two $500 million REITs, from
conglomerate-owned SM Prime SMPH.PS and Robinsons Land
RLC.PS , sources said.
"It is really a question of when, not if. On the size, it
depends on what the market can absorb," Alex Pomento, vice
president for investor relations of SM Prime, told Reuters.
A long-pending $1.5 billion IPO from National Grid Corp of
the Philippines (NGCP) to comply with regulatory requirements is
also expected, though sources said the process could be pushed
to next year.
Robinsons Land did not respond to a request for comment.
NGCP declined to comment while calls to Monde Nissin were
unanswered.
Issuers are keen to take advantage of the abundant market
liquidity and tap investors before next year's presidential
elections that could create market volatility.
"Companies are willing to fund expansion. That is what we
did not experience last year when a lot of them held back on
expansion plans, borrowing and IPOs," said Michael Gerard
Enriquez, CIO of Sun Life of Canada (Philippines).
The economy slumped by a record 9.5% last year, the worst
contraction in Southeast Asia for 2020, as Philippines enforced
one of the world's longest and strictest pandemic-induced
lockdowns. The government's record $93.7 billion national budget is
expected to pump-prime the economy, which is targeted to grow by
6.5-7.5% this year, government officials say.
A strong performance of IPOs launched last year is also
supporting new issues despite the broader market .PSI falling
9% last year.
"I assume these will be well-received. They will be a play
on high growth and consumption and economic dividends," said
Eduardo Francisco, president of BDO Capital and Investment Corp,
referring to potential IPOs of Monde Nissin and NGCP.
This year, about four property units are set to launch
REITs, an emerging asset class, after new rules announced last
year allowed lower public floats and tax breaks for REITs, which
typically pay higher dividends to investors. "Given the attractiveness of REITs as an investment and the
robust real estate market fundamentals in the Philippines, we
are expecting to see more REIT IPOs come to the market," said
BofA's Siah.
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Number of SEAsia IPOs, REITs, and secondary offerings https://tmsnrt.rs/3b9aCqM
Capital raising proceeds, in US$ mln https://tmsnrt.rs/37lF143
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