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MEGAWIDE Construction Corp., the contractor of property developer SM Development Corp., will list on the local bourse today under the trading symbol MWIDE, the first for the Philippine Stock Exchange this year.
MEGAWIDE CONSTRUCTION Corp. is banking on the aggressive expansion of SM Development Corp., the property arm of the Sy mall and banking conglomerate.
The P2.29-billion initial public offering (IPO) was oversubscribed and could spur market appetite for further listings despite an ongoing market consolidation.
“Shares were completely sold out on Monday (Feb. 7) morning, the morning of the first day of the offering,” Eduardo V. Francisco, president of the IPO’s issue manager and underwriter, BDO Capital and Investment Corp., said in a mobile “text” message.
“Excess demand is over P1 billion, which is great despite weak market and global concerns,” Mr. Francisco added.
The public offering was backed by the SM group’s purchase of a significant block, equivalent to a 20% stake in Megawide Construction.
Only a 14% stake was left for the investing public to purchase. The IPO involved a 34% stake in the firm.
“It has attracted a lot of attention considering it is the first IPO of the year,” Astro C. del Castillo, managing director of brokerage firm First Grade Holdings, Inc., said in a phone interview yesterday.
“In January and February, the market was just on a consolidation mode and Megawide Construction competed with other blue chips who were at attractive prices,” Mr. del Castillo noted.
Since Jan. 3, the Philippine Stock Exchange index (PSEi) has fallen by 9.02% or 348.83 points to 3,866.38 as foreign investors pocketed gains from emerging markets and transferred funds to developed markets like the United States and Europe.
“The market remains attractive for IPOs. We are hopeful that more firms will list to give more liquidity and more companies for investors to invest in,” Mr. del Castillo said.
The construction and engineering firm set its offer price at P7.84 per share for a total of 292 million common shares. The shares were sold during the period Feb. 7 to 11.
Proceeds will be used to finance the construction of a P1-billion concrete manufacturing complex, the acquisition of new machinery and equipment, and for general working capital requirements, Megawide Construction had said in its offering prospectus.
Mr. del Castillo said Megawide Construction was banking on the aggressive expansion of SM Development.
Around 70% of SM Development’s residential condominium projects are being built by the construction firm.
Succeeding IPOs for the year “depends on the pricing,” Mr. del Castillo said. “This consolidation will not take so long. Eventually, there could be different scenarios in the second and third quarter,” he added.
The Securities and Exchange Commission has yet to approve the P11.2-billion IPO of supermarket chain Puregold Price Club, Inc. and the P1.3-billion share sale of hybrid rice producer SL Agritech Corp.
In October, Gokongwei-led Cebu Air, Inc. conducted a P23.5-billion IPO.
It was followed by the P4.57-billion IPO of Zamora-led miner Nickel Asia Corp. in November and the P190.9-million listing of information and telecommunications firm IP.