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Public offering plans shelved by DMCI Homes

Posted on March 27, 2011 11:28:39 PM [ BusinessWorld Online ]
INITIAL public offering (IPO) plans have been indefinitely shelved by DMCI Project Developers, Inc., the property development arm of Consunji-led DMCI Holdings, Inc.
The real estate firm, which operates under the brand name DMCI Homes, had previously called off plans to go public in 2008.
"I do not think we will do the IPO. More likely not anymore," DMCI Holdings President Isidro A. Consunji told BusinessWorld in a phone interview.
Asked if the company was considering a new timeframe, Mr. Consunji replied that the plan, which he said would have involved the sale of P10 billion worth of shares, was "on hold."
"It is easier to borrow from banks compared with conducting an IPO," he added in Filipino, noting that DMCI Homes had secured some P5 billion from banks in January.
Mr. Consunji said he remained optimistic regarding business prospects for this year, noting that "Interest rates are low and production costs for low-density projects are cheap".
An IPO postponement, said an analyst, would be a good move.
"For now, the market is consolidating and considering that interest rates are still low despite the 25-basis point increase, it is still conducive to borrow [from banks]," said Astro C. del Castillo, managing director of brokerage firm First Grade Holdings, Inc., in a separate phone interview.
"As long as rates do not go up so much, it is good to borrow from the banks," he added.
The Philippine Stock Exchange (PSE) index is down 8.05% or 339.40 points to 3,875.81 since the start of the year, a development attributed to foreign institutional investors again looking at the West after pocketing gains made from emerging markets. Borrowing rates, meanwhile, are under pressure as the central bank last week finally started adjusting interest rates after keeping these on hold since July 2009.
DMCI Homes had asked the PSE last year about the possibility of conducting an IPO, reviving a plan -- which in 2008 involved the sale of some P3-4.5 billion worth of shares to the public -- that was scuttled by the global downturn.
DMCI Homes, which had 14 medium-rise and four high-rise projects as of October last year, contributed P1.27 billion to the conglomerate last year, up from P1.02 billion in 2009.
Aside from property development, DMCI Holdings -- which saw an 89% profit surge to P8.85 billion last year -- also has interests in construction (D.M. Consunji, Inc.), mining (Semirara Mining Corp. and DMCI Mining Corp.), power generation (DMCI Power Corp.) and water distribution (Maynilad Water Services, Inc.).
It also has a stake in San Miguel Corp.-controlled Private Infrastructure Development Corp., the firm that will build the 88-kilometer Tarlac-Pangasinan-La Union Toll Expressway.
DMCI Holdings shares were down 35 centavos to P36.65 per on Friday. -- Neil Jerome C. Morales
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