Concepcion Industrial Corp.: Initial Public Offering (IPO)

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More and more companies have recently signified interest to conduct an initial public offering (IPO),  taking advantage of the current upbeat outlook on the Philippines brought about by investment-grade credit rating upgrades and stable economic environment.

An initial public offering or IPO is a way for a company to raise capital, conducted through the issuance of shares to the public. It results in the listing and subsequent trading of shares on a public exchange (the Philippine Stock Exchange, in the case of the Philippines). Aside from IPO, way of introduction is another method of listing shares on the PSE.

This time, appliance manufacturer Concepcion Industrial Corporation is next to issue shares to the public for the first time, following the likes of Philippine Business Bank (PBB), Asia United Bank (AUB), AG Finance Inc. (AGF) and Del Monte Pacific Ltd. (DMPL) that listed their shares on the Philippine Stock Exchange this year.

Shares Offered and Price per Share

Concepcion Industrial Corp. (CIC), maker of airconditoning units, freezers and refrigerators, plans to raise as much as P2.7 billion through their IPO.

CIC will issue 74.96 million primary and secondary shares at a maximum price of P31.45 per share. The company is also allotting 11.24 million shares to cover overallotments.

The final offer price will be announced on November 8.

According to the company, proceeds will be used for expansion, payment of financial obligations, working capital and general corporate expenses.

Offer Period, Listing Date and Stock Code

The offer period will run from November 13 to 21. Around 70% of the shares will be offered to overseas investors, with the remaining 30% allotted to local investors.

Maybank Kim Eng Securities Pte. Ltd. was hired by the company as international underwriter and bookrunner, while the assigned domestic lead underwriter and issue manager is Maybank ATR Kim Eng Capital Partners, Inc.

Listing date is tentatively scheduled on November 27. The company’s stock will trade on the PSE using the stock ticker CIC.

Company Profile

Concepcion Industrial, formerly known as Concepcion Airconditioning Corp., is a subsidiary of Concepcion Industries, Inc. The company manufactures and markets airconditoners, freezers and refrigerators in the Philippines and currently holds 35% market share.

CIC’s brands of applianes include Carrier, Condura, Kelvinator and Toshiba-Carrier.

The company is led by its chairman and chief executive officer, Raul Joseph Concepcion.

Mr. Concepcion said the company is targeting to increase its sales by 15-16% percent this year from P4.6 billion in 2012. CIC’s net income in 2012, meanwhile, only grew 0.12% to P383.25 million from P382.80 million in 2011.

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About the Author

James Ryan Jonas teaches business strategy, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.1 Billion ($56 Million) worth of retirement funds on behalf of thousands of UP employees.

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