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DMWAI’s lower IPO price may spark interest

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By Arra B. Francia, Reporter

PROPERTY DEVELOPER and construction firm D.M. Wenceslao & Associates, Inc. (DMWAI) has priced its initial public offering (IPO) at a discount, which analysts said would make the offer more attractive to investors given the persistent volatility in the stock market.

In a listing notice posted to the stock exchange on Monday, DMWAI said it has priced its IPO at P12 per share, significantly lower than the maximum price of P22.90 per share it announced before.

The final offer price will allow the company to raise P8.15 billion from the issuance of 679.17 million shares, and up to P9.37 billion should it exercise its overallotment option of up to 101.88 million shares.

DMWAI had initially targeted to raise P15.55 billion from its primary offer, and up to P17.89 billion including the overallotment option.

“Investors will look at it as an opportunity to buy. Since it looks like the company (is giving) the investing public some room for price appreciation. From an investors’ standpoint, it’s a huge discount most especially (since) the maximum price is P22.90,” UPCC Securities Corp. Trader Aristotle D. Reyes, Jr. said in a text message.

Timson Securities, Inc. trader Jervin S. De Celis noted the company may have opted for a lower price due to the market’s volatility.

“I think they did it on purpose as the market’s volatility may dampen investors’ appetite for IPO’s so lowering the offer price will make it attractive to the investing public,” Mr. De Celis said in a separate message.

The volatility in the market has already discouraged Del Monte Philippines, Inc. from pushing through with its planned P17.55-billion share sale this month, announcing last week that it will wait for the market to stabilize before proceeding with the IPO.

Despite the discount, Mr. De Celis is keeping a conservative stance on the stock’s performance given the size of the offer.

“However, I don’t expect that this stock will perform as stellar as the IPO of DoubleDragon (Properties Corp.) and Xurpas, (Inc.) a few years ago, when those stocks rallied on the first day of trading since DMWAI’s offer is too big,” Mr. De Celis added.

DMWAI will use the net proceeds of the offer to finance its projects in the 204-hectare Aseana City in Parañaque City. The company has nine projects lined up in the area set to be completed in the next five years.

In a market note, brokerage F. Yap Securities, Inc. cited DMWAI’s land bank of 56.91 hectares in Aseana City as one of its competitive strengths.

“(DMWAI) currently has a land bank of 77.56 hectares in the Philippines, that will meet the development needs for the next 10 years. Bulk of this is in Aseana City (56.91 hectares) with a value at around P132.8 billion, including existing properties and current developments,” according to F. Yap Securities.

However, the brokerage also said that “stiff competition from other developers in close proximity” may also affect the company’s performance. Aseana City is located near the SM Mall of Asia complex, as well as Entertainment City.

DMWAI’s IPO is set to run from June 18 to 22, with target listing at the stock exchange on June 29. It will have the ticker DMW.

The company has engaged BPI Capital Corp. and Maybank King Eng Securities Pte. Ltd. as the joint global coordinators and bookrunners for the offer, with the latter also acting as international lead manager and underwriter.