The Philippine Stock Exchange (PSE) approved the integrated property developer and construction group D.M. Wenceslao and Associates Inc. (DMWAI)’s plan for an Initial Public Offering (IPO) worth as much as P15.5 billion. The said IPO will happen this June 2018. The company is authorized to sell 679.17 million common shares with a price per share up to P22.90.
The controlling shareholder Wendel Holdings Co. Inc. has the option to sell up to 101.88 million shares. The equity deal will be priced this coming June 7. The IPO will run from June 18 to 22 bringing about 20% of DMWAI’s outstanding shares. BPI Capital Corp. and Maybank Kim Eng will be the book runners and underwriters for the said offering.
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DMWAI has been in the land reclamation and infrastructure construction business for more than 50 years. 78.6% is owned by Wendel Holdings while the remaining 21.3% is owned by Delfin Wenceslao, Jr., the founder, president and director of the company. One of its known accomplishments is assisting the government in reclaiming Aseana City while thereafter obtaining a title to a 56.8-hectare portion of the reclaimed land. The company has completed more than a hundred land reclamation and construction projects. Apart from this, it also developed 3 commercial buildings in Aseana City. The company intends to be listed in the PSE’s main bourse under the ticker “DMW” this June 29.
Last 2017, the company had a net profit of P1.56 billion which is 30% higher from the P1.2 billion profit made in 2016. Total revenue amounted to P3 billion in 2017.
The company intends to declare annual dividends at least 30% of its earnings the previous year subject to the availability of its unrestricted earnings.
At the maximum price per share, it will have a market capitalization of P77.8 billion and at least 70% of its shares are intended to be sold outside the Philippines. DMWAI intends to use the net proceeds of the IPO for its real estate development portfolio through a mix of commercial and residential projects. This is a very good IPO because none of the proceeds will go to debt repayment because the company has a very low level of debt. This is one of the the things that I look for every time there is an IPO. You want the money to go to expansion and not debt repayment.
Another bright spot for this is the IPO is composed of 679.2 million primary shares and secondary shares will only be sold should there be an over-allotment.
DMWAI is the first company to declare an IPO this 2018. While economic growth in the Philippines is of no concern, the economy is seen to be quite volatile this year especially with an inflation rate going beyond the BSP’s forecast. In fact, monetary authorities decided to hike its all-time low key policy interest rate to take measures. More pressures are seen towards the implementation of the TRAIN law and the administration’s plan of focusing on infrastructure spending. The negative effects can be seen in the local bourse which has dropped from its all-time high close of 9,058.62 last Jan.29 to 7,647.51 on May 25. On a global scale, the bourse has also been affected by the rising treasury yields in the U.S. Foreign investors are also leaving the equity market in the country as evidenced by its net foreign selling for the last eight days. The success of its IPO may depend on its pricing; nonetheless, the company is positive that the IPO will turn out smoothly.