LT Group Raises $912 Million in Philippines’s Largest Equity Sale

By Cris Larano | Source:

Filipino billionaire Lucio Tan’s LT Group Inc. LTG.PH +5.22% raised 37.72 billion Philippine pesos ($912.2 million) in the country’s largest ever equity sale, benefiting from a stock market that has boomed just weeks after the country received an investment-grade rating.

The conglomerate’s private-placement sale, which was announced last year, followed other large share sales in the region in recent months. It attracted strong interest from beyond Asia, sole book runner and lead issue manager UBS AG UBSN.VX -1.79% said, demonstrating investors’ appetite for Philippine assets.

The offer was priced at the top end of an indicative range of 18 pesos to 20.50 pesos a share, and the company exercised an overallotment option to issue a total of 1.84 billion shares, UBS said Wednesday. The sale attracted 11 cornerstone investors and the order book totaled $3.5 billion. UBS said 23% of the funds came from Europe, 36% came from the U.S., and 41% came from Asia. It didn’t provide details on the cornerstone investors.

Lauro Baja III, managing director of UBS’s Manila operations, said LT Group’s share sale “has broken many records in deal-making in the Philippines.” The deal eclipsed the $904 million that San Miguel Corp. SMC.PH -1.14% raised via a bond sale in May 2011, as well as budget carrier Cebu Air Inc.’s CEB.PH 0.00% $620.8 million initial public offering in 2010.

The company, formerly known as Tanduay Holdings Inc., was renamed LT Group after Mr. Tan injected beer maker Asia Brewery Inc., liquor producer Tanduay Distillers Inc., Philippine National Bank, PNB.PH +1.26% Eton Properties Philippines Inc. and PMFTC Inc., the cigarette manufacturing joint venture with the local unit of Philip Morris, PM -2.50% into the company.

Mr. Tan’s stake in LT Group, which is held through Tangent Holdings Corp., will fall to 74.37% after the share placement, from 89.59%.

The sale was a top-up placement, by which the controlling shareholders initially lend their shares for sale to buyers and then subscribe to an equal number of shares and transfer the proceeds of the placement to the listed company. Such a private placement enables the company to bypass the stock exchange’s regulatory requirements for public share sales.

LT Group said proceeds would be used to repay debt as well as expand its beer, liquor, property and banking businesses. Its shares surged after the sale, rising 11% to close at a record high 23 Philippine pesos Wednesday, outperforming the benchmark index’s 0.9% rise. The PSE Composite index is up 18% this year.

Erwin Balita, a fund manager at BPI Asset Management, said the sale is “reflective of foreign investors’ appetite for Philippine assets given the optimistic outlook for the country.”

“What the Philippines offers is a strong consumption base that helps shield the economy from external shocks,” Mr. Balita said. The Philippines has a population of 100 million, and the Asian Development Bank earlier this month upgraded the country’s 2013 growth forecast to 6% from an earlier forecast of 5%.

Last month, Fitch Ratings upgraded the Philippines’s long-term foreign-currency rating by one notch to BBB-minus. It left the outlook on the rating at stable.

Luz Lorenzo, market strategist at Maybank ATR-Kim Eng, said “the company offers broad exposure to the Philippine economy” because its businesses span many sectors.

Last month, Mapletree Investments Pte. Ltd., a unit of Singaporean state-investment firm Temasek Holdings Pte. Ltd., completed a US$1.3 billion IPO for a China-focused real-estate investment trust, while private-equity firm CVC Capital Partners raised around $1.3 billion from selling nearly half of its stake in Indonesian retailer Matahari Department Store.

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