Corporate News

Hotel operator eyes IPO by October, Sterling Bank in five years

Posted on July 22, 2013

HOTEL OPERATOR Discovery World Corp. (Discovery World) -- owned by Tiu-led JTKC Equities Inc. and The Discovery Leisure Company, Inc. -- hopes to conduct its planned initial public offering (IPO) by October if market volatility subsides, a senior JTKC official said on Friday last week.

“We’re definitely looking (to conduct IPO) this year, as long as the market is stable,” John Y. Tiu, Jr., vice-president and director of JTKC, told reporters at the sidelines of a stockholders’ meeting of I-Remit Inc., where he is a director.

Discovery World secured last July 11 the approval of the Securities and Exchange Commission (SEC) to go public. It filed its IPO application with the corporate regulator last March.

It has yet to secure separate clearance from the Philippine Stock Exchange (PSE).

In its application with the SEC, Discovery World listed the indicative offer dates as July 23-29 and tentative listing date of Aug. 1.

Noting “that’s [sic] the old dates,” Mr. Tiu said the new timetable may be set during “the board meeting next Wednesday.”

“What we’re doing is just passing all the regulatory approvals,” he explained.

“Once that’s over, the board will decide whether we’ll do it in September or August, or October.”

Much, he said, will depend on the state of the market.

The PSE index, which had recorded 31 record highs at closing, so far, this year, has succumbed with its peers overseas to uncertainty since officials of the US Federal Reserve first floated late in May the possibility of scaling back by yearend an $85-billion monthly bond-buying stimulus in the face of sustained US economic recovery.

Improved US economic prospects, in turn, have prompted foreign funds to junk emerging markets which had provided havens from uncertainties in the West.

Discovery World, the seventh company allowed to go public this year, plans to raise P1.004 billion from the sale of 306 million shares at P3.28 apiece, Mr. Tiu confirmed.

Proceeds will be used to continue Discovery World’s expansion, including purchase of a property in Coron, Palawan as well as a beach project in San Vicente in the same province, he explained.

“We are targeting to develop a resort in Coron; we’re still pushing through the project in San Vicente,” Mr. Tiu said.

Development of the Coron property, once acquired, is expected to take “one-and-a-half to two years,” he added.

The company also plans to expand Discovery Shores Boracay by building 12 more villas.

It also operates Discovery Suites in Ortigas Complex, Pasig City and is “developing one (Discovery Primea) on Ayala, and then there’s (Discovery Country Suites) a small bed-and-breakfast in Tagaytay.”

All the company’s initiatives are designed to capitalize on the country’s promising tourism potentials, Mr. Tiu said. “We feel that the resorts are the best way to expand, but we also started a company called Discovery Fleet where we’ve invested into two boats,” he explained.

Discovery Fleet offers cruises to waters off Batangas, Pandan Island and Coron, as well as diving packages in Apo and Tubbataha reefs.

Mr. Tiu added that JTKC’s banking arm, Sterling Bank of Asia (Sterling Bank) is eyeing to go public in three to five years.

“I think the momentum is there,” he said of the bank’s growth prospects, adding it still needs to build up its assets before it finally opts to go public.

Mr. Tiu used two other banks which went public this year as a benchmark. “It’s a question of scale,” he explained. “I think if you look at EastWest (East West Banking Corp.), they have about P20 billion, AUB (Asia United Bank Corp.) is not much smaller.”

PSE’s Web site put EastWest’s capitalization at P32.61 billion and that of AUB at P25.24 billion.

“We’re shy of P2 billion -- it’s a long way to go,” Mr. Tiu said. “If you’re too small, the appetite of the market wouldn’t be out there.”

Late last year, the thrift bank was allowed by the central bank and SEC to raise P500 million “for additional capital” in the first quarter by selling shares to existing shareholders. Regulators also approved the increase in the bank’s authorized capital to P4 billion from P3 billion to pave the way for the share sale, which has yet to be conducted. -- LEGR