The Philippine unit of energy giant Royal Dutch Shell PLC has started taking orders for a $400 million-plus initial public offering on the stock exchange in Manila, in a sign that some investors are still willing to brave political concerns that have weighed on Philippine markets recently.
Pilipinas Shell Petroleum Corp. has decided to move ahead with the IPO after testing investor appetite last week, people with knowledge of the process said Thursday. The order taking, also known as the book-building process, will last for a week with the aim of listing Pilipinas Shell on the Philippine Stock Exchange on Nov. 3, the people said.
Shell wasn't immediately available for comment.
Philippine stocks and the peso have suffered in recent weeks, largely due to unease about recently elected President Rodrigo Duterte. Mr. Duterte, who was elected in June, has spooked investors with his coarse statements and criticisms of traditional allies such as the U.S. He has insulted U.S. President Barack Obama, criticized high-profile businessmen and initiated a so-called war on drugs and crime that has resulted in the deaths of more than 3,000 people.
Foreign investors unloaded $213 million worth of stocks listed on the Philippine exchange in September, about a fifth of the net amount that they bought over the previous eight months. The benchmark PSE index fell 2% in September, while the Philippine peso lost about 4% of its value against the U.S. dollar, closing the month at a seven-year low of 48.50 pesos.
One person familiar with Pilipinas Shell's listing process said that some investors had raised concerns about the domestic political situation, but were still eager to invest in the IPO given the country's strong demand for infrastructure and the company's good performance. The company is the Philippines' second-largest oil refiner by capacity.
Pilipinas Shell has already secured about eight anchor investors who have agreed to buy a chunk of the company's shares ahead of the IPO, the person said without giving details.
The company is seeking to sell shares between 64 and 70 pesos a share (US$1.33 to US$1.44), people familiar with the deal said.
The IPO, if successful, would be the second such fundraising by a foreign company in less than two months. In July, Mexican cement maker Cemex SAB raised about $507 million in net proceeds from an IPO of its Philippine unit.
J.P. Morgan Chase & Co. and local firm BPI Capital Corp. are advising on the Pilipinas Shell IPO, which is mandated by rules requiring the firm to sell at least 10% of its shares to the public. The IPO proceeds will be used to fund Pilipinas Shell's capital needs as well as to repay debts.
Pilipinas Shell operates one of two oil refineries in the Philippines and derives more than 95% of its net sales from the domestic market.
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