LANDCO PACIFIC Corp., the property arm of Metro Pacific Investments Corp. (MPIC), is taking a cautious stance on a planned market debut this year amid turmoil in the market.
In a chance interview, Landco President Alfred Xeres-Burgos, Jr. said the economic environment "seems not to be ready to handle an initial public offering (IPO) at this stage."
Filinvest Development Corp. (FDC) has also put on hold its planned follow-on share offering, citing uninterested investors trading in a jittery market.
"We deferred it because the market was not really suited for any offering. No one is going to be interested," Filinvest Chief Financial Officer Nelson M. Bona told BusinessWorld.
So far, only Pepsi-Cola Products Philippines, Inc., the local franchise holder of the Pepsi soft drink brand, has gone public this year.
"We would have wanted to but I think the market is not ready. The economic situation is not good in the US; the worldwide economic uncertainty is affecting us right now. In the meantime, we will have a wait-and-see attitude. We are still open for an IPO. It is just the timing. I doubt [if it will be this year]," Mr. Xeres-Burgos told BusinessWorld.
Landco was looking at the possibility of listing its shares in the Philippine Stock Exchange this year, Executive Vice-President and Chief Operating Officer Francis V. Ceballos said earlier, although the details have yet to be ironed out.
Gokongwei-led Cebu Air, Inc., Petrolift, Inc. and Viva Communications Inc. have deferred IPO plans due to unfavorable market conditions although food and beverage giant San Miguel Corp. is bent on listing its domestic beer and regional packaging units this year.
Mr. Xeres-Burgos said, "We are holding on as a group. We don’t want to go through what the other guys went through. They prepared for the IPO but they had to back off because the market was not yet ready."
Landco, which is 49%-owned by Mr. Xeres-Burgos, has yet to tap underwriters for its offering.
Mr. Xeres-Burgos did not say how much his company will be spending this year.
"A lot of our outlays is basically from internally generated funds. Each project has a different outlay," he said.
The property developer aims to be among the country’s largest by 2008 through various projects.
Among its projects is the Hacienda Escudero, Landco’s single largest residential resort project with an anticipated P10-billion capital requirement.
‘Doesn’t make sense’
Mr. Bona said risk aversion is prevailing in the market.
"[I]t doesn’t make sense for anybody to go out there unless they want to sell their shares at a cheap price," he said in an interview yesterday.
The offering, which is still awaiting the securities regulator’s approval, would have generated P35 billion through the sale of up to 3.5 billion primary and secondary shares.
ALG Holdings, the holding firm of the Gotianun family controlling 92% of FDC, is the selling shareholder.
The shares were given an assumed offer price of P10 per share. Filinvest shares yesterday closed 10 centavos down at P3.50.
Mr. Bona said the offering could have been undertaken late last year with funds coming in time for the capital expenditure programs of the company and its subsidiaries this year.
"Our target then was [to have the offering in] November so we could list the additional shares early this year. But since it’s on hold, we’ll look into other alternatives," he said.
He said the company could avail of internal funds and unused credit lines from major banks worth P12 billion.
"Our balance sheet is very strong so we can leverage up anytime we want. In fact, we have so much lines that we haven’t [tapped] so it gives us a lot of room to continue with the expansion plans as what we have formulated earlier on," Mr. Bona said.
The proceeds from the offering would have been used to build an ethanol plant in one of the company’s sugar refineries, finance real estate projects, and hike the capital of its banking subsidiary.
Analysts said earlier this year that conducting an initial public offering in a volatile market is not advisable due to lack of investor appetite.
The local stock market so far has fallen 19.68%, a turnaround from a full-year gain of 21.4% in 2007.
