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By Keith Richard D. Mariano

Tech firm Audiowav planning P2.66-B IPO

Posted on September 01, 2016

AUDIOWAV Media, Inc. is seeking to debut next on the equities market with an initial public offering (IPO) for as much as P2.66 billion.

The technology company has sought approval of the Securities and Exchange Commission (SEC) to list and trade on the Small, Medium and Emerging (SME) Board of the Philippine Stock Exchange (PSE) starting Nov. 21, according to a statement issued on Wednesday.

Audiowav intends to offer 900 million common shares for P1.77-2.96 apiece to public investors to raise P1.59-2.66 billion, according to a preliminary prospectus it filed with the SEC late Tuesday.

The maiden share sale will allow public investors to own 23.1% of common shares in Audiowav. The 900 million shares comprising the offer will add to the company’s 3,000,000,200 issued and outstanding common shares.

Audiowav hired SB Capital Investment Corp. as issue manager, bookrunner and underwriter.

The company will sell 629,952,000 shares or 75% of the offering through SB Capital, a maximum of 180,048,000 shares to PSE trading participants and the remaining 90 million shares to local small investors.

Audiowav expects to net P1.43-2.41 billion from the IPO to finance its expansion to other Asian countries, long-term research and development, product diversification and general corporate purposes.

“The company intends to use majority of the net proceeds from the offer to fund its expansion in the evolving markets within Asia such as Malaysia, Thailand, Vietnam and China,” the prospectus said, adding that disbursement should be completed by end-2017.

Audiowav provides visuals, music as well as messaging, ambient scenting, public announcement systems and interactive mobile solutions to businesses through proprietary technology.

The company was founded by its president and chief executive officer, Carlos Jose G. Hinolan, in 2003 originally to provide in-store radio for high-traffic venues like ships, mass transit, bus and bus terminals, trains and airport terminals for advertising, marketing and events.

The technology company services around 2,420 establishments. Its customer base includes fast food and restaurant chains, shopping malls, retail stores, telecommunications firms and hospitality businesses.

The latest IPO application reflects sustained interest in the local equities market, analysts said in separate telephone interviews.

“In general, I think IPOs will do okay because the performances of the past IPOs have been okay [unless] there’s one big disaster that will make them rethink their IPOs,” Eagle Securities, Inc. President Joseph Y. Roxas said.

Luis A. Limlingan, business development head at Regina Capital Development Corp., noted that more firms consider debuting on the stock exchange particularly when trading valuations are soaring.

“That’s when you want to list through IPOs because you can raise higher [amounts],” he said.

IPO prospects remain positive at the PSE despite initially weak capital-raising activity in the face of uncertainty tied with the country’s leadership transition between May and June, said First Metro Investment Corp. Head of Research Cristina S. Ulang.

“There is a very strong IPO potential on smooth post-elections, political transition and policy clarity of the Duterte administration. There is also strong foreign buying support for local equities, with a year-to-date tally of P55 billion,” Ms. Ulang said.

The PSE targets to have facilitated P200 billion worth of maiden share sales, follow-on offerings and other fundraising activities by yearend.

The bourse has so far seen P91 billion worth of capital-raising, including the P778-million maiden offer of Golden Haven Memorial Park, Inc. in late June and the P25.1-billion share sale of Cemex Holdings Philippines, Inc. in mid-July.

PSE Chief Operating Officer Roel A. Refran had earlier noted interest from small, medium and emerging companies in listing and trading on the equities bourse.

“I think we could see the trend... because of less restriction for smaller companies. I guess more companies of that size will meet the criteria,” Regina Capital’s Mr. Limlingan said.

The minimum capital requirement under the SME board stands at P100 million, of which at least P25% must be subscribed and fully paid. This compares to the P500-million capital stock of companies on PSE’s main board.

Audiowav’s application follows that of Pilipinas Shell Petroleum Corp., which plans to debut on the stock exchange with a P29.7-billion offer slated for October.

TVI Resource Development (Philippines), Inc.; Pointwest Technologies Corp. and Green Power Panay Philippines, Inc. are also seeking SEC approval to undertake IPOs amounting to P1.66 billion, P2.21 billion and 222.8 million, respectively.

Companies looking to debut on the PSE are expected to continue taking into account external developments, including the possible interest rate hike in the United States towards yearend that could weigh on investor sentiment toward local stocks.

“Usually when the market is very active and prices are very good, that’s when it attracts more IPOs,” Eagle Securities’ Mr. Roxas noted.