Pilipinas Shell Petroleum Corp—the Royal Dutch Shell PLC’s Philippine unit—is aiming to come up with up to $400 million in an initial public offering on the Philippine Stock Exchange in Manila despite recent political issues weighing the Philippine markets down.
The energy giant’s Philippine unit pushed through with its IPO after seeing that some investors are still willing to take a leap and surf the uncertain waters of the country’s market. The book-building process is said to last for a week ending with Pilipinas Shell being enlisted on the Philippine Stock Exchange on Nov 3, people knowledgeable about the matter said.
Shell didn’t have anything to say about it yet.
With the growing unease over President Rodrigo Duterte’s “roughness” towards long-standing allies such as the United States and the U.N., the Philippine stocks and the peso have limped in weeks. The recently elected head of state has insulted U.S. President Barrack Obama and the U.N. and even told the U.S. president to “go to hell” in a recent speech, while telling the European Union to “choose purgatory” instead, saying that hell is “already filled up”. He even threatened to sever ties with the ally country.
The president’s tirades were in response to their criticisms over his “war” against illegal drugs and crime that resulted to more than 3,000 casualties that mostly include alleged drug addicts, dealers, and syndicate members. The U.S., U.N., and EU, all expressed concerns if the president’s eradication measures were in accordance with human rights laws.
Reports of foreign investors pulling out shares rocked the market’s boat. Foreign investors removed $213 million worth of listed Philippine exchange stocks in September. The Philippine peso slumped about 4 percent versus the dollar, in a seven-year low close of 48.50 pesos in September. A 2 percent dive was made by the benchmark PSE index in September.
Some investors are anxious over the political situation of the country, but still showed eagerness to invest in the IPO since the Philippines has a strong demand for infrastructure and Shell is an all-time good performer, according to a person familiar with the company’s order taking. It is the Philippines’ second-largest oil refiner by capacity.
About eight anchor investors already agreed to buy a chunk of Pilipinas Shell’s shares ahead of the IPO, the person said with no further details given.
The company opts for 64 to 70 pesos ($1.33 to $1.44) per-share price, people with in-depth knowledge with the deal said.
If the IPO prove to be successful, this would be the second fundraising thru IPO by a foreign company in more or less two months. Mexican cement maker Cemex SAB made its Philippine unit’s IPO in July raising about $507 million in net proceeds.
As stipulated by rules requiring the firm to sell at least 10 percent of its shares to the public, J.P. Morgan Chase & Co. and local firm BPI Capital Corp are advising on the Pilipinas Shell IPO. Proceeds of the company’s first public offering will be used to fund capital needs and repay debts.
One of two oil refineries in the country are operated by Pilipinas Shell and more than95 percent of its net sales are from the local market.
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