By Denise A. Valdez
MERRYMART Consumer Corp. has gained the approval of the Securities and Exchange Commission (SEC) to conduct a P1.6-billion initial public offering (IPO), amid a volatile market facing negative investor sentiment over the coronavirus disease 2019 (COVID-19) outbreak.
In a statement yesterday, the grocery operator owned by businessman Edgar “Injap” J. Sia II said it received a pre-effective approval from the SEC to do a primary offer of 1.59 billion shares to be sold at P1 each.
The SEC also gave the go signal for the registration of 6 billion common shares with par value of P0.05 each, making a total of 7.59 billion shares in MerryMart to be listed at the stock exchange.
Proceeds from the IPO, which are estimated at P1.47 billion, will support the company’s expansion plan.
MerryMart, which opened its first branch in April 2019, is targeting to have 1,200 branches and generate P120 billion in systemwide sales revenue by 2023.
In a separate statement, the SEC said P1.03 billion of the MerryMart proceeds will be allocated to capital expenditures and initial working capital. Some P220.9 million will go to investments in distribution centers, and P220.1 million to general corporate purposes.
PNB Capital and Investment Corp. has been tapped as the sole issue manager, lead underwriter and sole bookrunner for the offering.
“We believe this step will further strengthen the market grip of all the industries that our group is involved in,” Mr. Sia was quoted as saying in a MerryMart statement.
The company plans to open 12 new stores as soon as the second quarter of 2020. By the end of 2021, its plan is to reach 100 branches across the country, where about 25 of these stores will be supported by proceeds from the IPO.
MerryMart’s plan to list at the exchange comes as the stock market entered bear territory on Monday when it fell to the 6,300 level. It closed at 6,353.26 yesterday, up 34.88 points or 0.55% from the previous session.
“We don’t think that it’s a good idea for MerryMart to pursue listing in the market given the negative sentiment right now due to the COVID-19 outbreak,” Philstocks Financial, Inc. Research Associate Claire T. Alviar said in a text message.
“Although it is offering basic needs such as foods, its business may also be hit by the outbreak since most people are avoiding crowded places and choosing to stay home,” she added.
“Since Merrymart is still new in its industry, it might most likely be challenged this year in terms of earnings, along with the negative sentiment in the overall market.”
PNB Securities, Inc. President Manuel Antonio G. Lisbona also said the market situation is indeed “scary” at present, but how MerryMart will do in its IPO will still depend on investor appetite.
“[I]f clients are willing to subscribe to the shares, then the offering will proceed. At the moment, we have not received any cancellations from our clients,” he said.
MerryMart is a wholly owned subsidiary of Injap Investments, Inc., Mr. Sia’s holding firm for his businesses. It has key shareholdings in DoubleDragon together with Tony Tan Caktiong’s Honeystar Holdings Corp.
Aside from MerryMart’s application, the SEC also approved yesterday the plan of Filinvest Development Corp. to issue up to P15 billion fixed-rate bonds, and the application of Altus Property Ventures, Inc. to list by way of introduction.
Altus will enter the stock exchange through the distribution of up to 100 million common shares as property dividends to shareholders of Robinsons Land Corp. These will be listed by way of introduction on the small main board of the stock exchange.
The shares will have an initial listing price of P10.10 each, representing 100% of the company’s issued and outstanding common shares.