By Arra B. Francia, Reporter
APPETITE FOR San Miguel Food and Beverage, Inc. (SMFB)’s P142-billion follow-on offering will depend on its pricing, as the company undertakes the largest fund-raising activity in the country before the end of the year.
In a regulatory filing at the Securities and Exchange Commission (SEC), SMFB applied to sell up to 1.02 billion common shares, consisting of 887 million common shares with an over-allotment option of up to 133.05 million common shares, priced at up to P140 apiece. The shares to be offered are currently owned by parent, San Miguel Corp. (SMC).
The shares comprise 17.26% of the company’s issued and outstanding capital stock. The offering will allow SMFB to comply with the minimum public ownership rule of 10%, as its current public float stands at 4.12%.
Once it secures approval from the SEC and Philippine Stock Exchange, the listed food and beverage company looks to price the offering by Oct. 19. The offering is scheduled to run from Oct. 23 to 29. Crossing of the offer shares is slated for Nov. 6.
The company engaged J.P. Morgan Securities, Plc, Morgan Stanley Asia (Singapore) Pte., and UBS AG Singapore Branch as the offer’s joint global coordinators. Deutsche Bank AG, Hong Kong branch and Goldman Sachs (Singapore) Pte., will act as joint book runners, while BDO Capital & Investment Corp. and BPI Capital Corp. will act as local lead underwriters.
SMFB also tapped Standard Chartered Bank to be its financial adviser.
Funds raised from the offering will be used to finance SMC’s projects, according to the company’s prospectus.
Philstocks Financial, Inc. Research Associate Piper Chaucer Tan said the company disclosed in a briefing last Aug. 9 that the proceeds will be used for its infrastructure projects.
Should it push through, this will be the largest equities offering in the country since LT Group, Inc.’s P37.7-billion fund-raising activity back in 2013.
Analysts keeping track of the SMFB said investors will be looking at the final offer price to determine its performance. Shares in SMFB ended at P92.10 each on Thursday, 15.12% or P12.10 higher from its price in the previous session. However, this is still 52% lower than the offer’s maximum price of P140.
“The offering is a significant premium to the market price, which may put off many investors, particularly those with short horizons,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.
“To make the company’s follow-on offering attractive, the current market price must be above follow-on offering,” Philstocks’ Mr. Tan said in a separate message.
Despite the premium pricing, UPCC Securities Corp. Trader Aristotle D. Reyes, Jr. noted SMFB’s positive performance.
“Nonetheless (SMFB) is performing very well despite the very challenging climate in the consumer sector. They posted positive earnings for the second quarter, outperforming its peers. There’s still a gap in supply for its beer business and they continue to expand its plants. Beer business continues to be a cash cow in the group,” Mr. Reyes said via text.
“It’s a consumer play. I can see SMFB to enter the PSEi and other indices considering its market value post offer,” he added.
SMFB generated a net income of P15.4 billion in the first half of 2018, 20% higher than the same period a year ago, as consolidated revenues also went up 15% to P137.4 billion.

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