(Shell Philippines IPO) Price, Listing Date, How to subscribe

James Ryan Jonas

Oil refinery Shell Philippines is finally pushing through with its initial public offering (IPO) after almost 20 years of delay.

Pilipinas Shell Petroleum Corp. is set to raise P21.12 billion to P23.1 billion from its planned IPO, issuing up to 330 million shares, with each stock indicatively priced between P64 and P70.

ipo-initial-public-offeringPrice and Listing Date

This price range is already a reduction from the maximum IPO price of P90 per share, originally announced during the previous month.

The final price is expected to be released on October 13, a day after the end of the IPO bookbuilding period.

Pilipinas Shell’s shares will be listed and will start trading on the Philippine Stock Exchange (PSE) on November 3, 2016.

Up to 330 million shares for sale

The company will offer 300 million shares to the investing public and another 30 million shares for overallotment (in case of oversubscription).

These shares currently represent 18.6% of Shell Philippines’ total outstanding stock.

At least 69% of the offered shares would be allocated to foreign investors and cornerstone investors while 30% would be allotted to trading participants and local small investors.

The remaining 1% will be offered exclusively to Pilipinas Shell’s regular employees.

Use of Proceeds

From the 300 million primary shares, 270 million will be sold by the selling shareholders, particularly, Shell Overseas Investments B.V., The Insular Life Assurance Co. Ltd. and Spathodea Campanulata Inc.

All proceeds from the 270 million shares will go to the selling shareholders.

Meanwhile, cash to be raised from the remaining 30 million shares will be used to finance the company’s capital expenditures, working capital, and general corporate expenses.

The proceeds will help Pilipinas Shell achieve its goal of growing its retail service stations to 1,220 by the year 2020, up from only 996 outlets as of June 2016.

Delayed for almost 20 years

Pilipinas Shell, a subsidiary of Royal Dutch Shell PLC, is compelled to have an IPO in compliance with the Oil Deregulation Act of 1998, which requires refineries operating in the Philippines to offer at least 10% of its shares to the public.

Oil refiners then had until 2001 to conduct the IPO, but Pilipinas Shell was able to lobby for a deferment several times, citing unstable market conditions and market volatility in the early to mid-2000s.

In 2013, the Department of Energy reiterated that Shell must comply with the law and, afterwards, the company decided to firm up its IPO plans which culminates this November 2016.

How to subscribe to the Pilipinas Shell IPO

Investors planning to join the Shell IPO can only buy shares through any licensed stock brokerage company in the Philippines.

Online stockbrokers such as CitisecOnline (COL), BPI Trade, AB Capital Securities, First Metro Securities, Unicapital Securities, Philstocks.ph, Regina Capital Development Company, and RCBC Securities, among others, will upload the IPO subscription sheet on their websites during the offer period.

Interested investors must download, fill out, and submit the sheet and other documentary requirements to the broker before the deadline.

Investors with cash of P25,000 or less can still take part in the Shell IPO via the PSE’s Local Small Investors program. (See: How to invest in an IPO with less than P25,000)

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James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.