Demand for SM Beer float overflows 1 day before close

05/06/2008

Food conglomerate San Miguel Corp. (SMC) brewery unit San Miguel Beer’s initial public offering was a huge hit with the local float, which accounts for 30 percent of the total offering, oversubscribed yesterday with still a day remaining before the close of subscriptions.

The overseas offer, which closed on April 24, was around 1.5 times of the total issues, which was priced at P8 per share or at the bottom of the range.

“It’s oversubscribed already, that is why we at BDO have to cut down some of our customers,” Ed Francisco, executive vice-president at BDO Capital Investment Corp., one of the underwriters for the float said.

“Cutting down means the issue is really doing well even if the market is not doing well,” Francisco added.

San Miguel Brewery, considered the food and beverage giant’s crown jewel, has priced the offer at P8 per share, the low end of IPO price range. The shares will be listed on May 12.

Only 5 percent of the company’s stock is being put on sale, raising for the company P6.16 billion in proceeds.

Turbulent market conditions and investor complaints that the offer was too expensive forced San Miguel to twice shrink the price range from an original P9.50 to P16.30 per share and halve size of the offer.

The beer business accounts for around 40 percent of group operating profit. In the first quarter of this year, it posted a 37-percent increase in net profit to P2.5 billion on net sales up 13 percent.

The bulk of the IPO proceeds will be used to pay off San Miguel’s debts.

Citigroup and ATR Kim-Eng Capital Partners are joint global coordinators in the San Miguel Brewery IPO. ATR Kim-Eng Capital and BDO Capital are joint domestic underwriters.

The overall index .PSI was up 1.1 percent.

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