The board of the Philippine Stock Exchange (PSE) on Wednesday approved the initial public offering (IPO) applications of the cement maker Eagle Cement Corporation.
According to the IPO prospectus approved by the Securities and Exchange Commission (SEC), Eagle Cement will be offering 500 million primary shares at a maximum price of P16.00 apiece and up to 75 million common shares as an overallotment option.
The final price of the offer will be set on May 11, and the offer period is scheduled to run from May 16 to 22. The IPO will help Eagle Cement raise as much as P9.2 billion (about US$184.81 million), making it by far the largest IPO for the Philippines in 2017.
The IPO, if successful, will establish the company’s public ownership at 11.5 percent and a market capitalization up to P80 billion, which translates to about US$1.6 billion.
Eagle Cement has set its tentative listing date on May 29 under the ticker symbol “EAGLE”.
There is a huge demand for cement in the fast-growing Philippines, as the country is experiencing an increasing year-to-year expenditure on big construction projects. This builds an industry where cement makers are raking in billions of pesos in revenue every year.
This industry behemoth is however dominated by three multinational firms – LafargeHolcim, Republic (CRH-Aboitiz), and Cemex. LafargeHolcim has the largest share of the Mindanao market at 55 percent while Cemex takes up about 40 percent share of the Visayas market.
Being the fourth largest cement producer in the Philippines, Eagle Cement looks to rise above the 3 multinational giants which constitute the reason behind its IPO this time around. It plans to hone its competitive strength of end-to-end production strategy by integrating critical raw material sourcing with modern manufacturing technology.
Thus, part of the IPO proceeds will be used to partially finance the construction of a fourth production line – a 2 million metric ton cement plant in Cebu. The project is expected to raise Eagle’s production capacity to 9.1 million metric tons per annum by 2020.
Besides, the project will also provide inroads into the Visayas and Mindanao cement market, the current directive of the national government in an effort to hasten infrastructure development outside Luzon.
“The way for Eagle Cement to grow right away is to go to Visayas and Mindanao. There’s a big shortage there. They are importing to cope up with demand in Visayas and Mindanao, so we will build plants. We have always been aggressive,” said John Paul Ang, the President and Chief Executive Officer of Eagle Cement.
Currently, Eagle Cement has a production capacity of 5.1 million tons per year. It is presently completing its third production line in Bulacan which consists of two production lines with an annual combined cement production capacity of approximately 5.1 million metric tons.
This is the largest integrated single plant production capacity in terms of cement output in the Philippines which will raise the company’s production capacity to 7.1 million metric tons per annum by 2018.
China Bank Capital Corp., Philippines National Bank, and Security Bank Capital Investment Corp. were appointed as joint issue managers, underwriters, and bookrunners for this initial public offering.
Aside from Eagle Cement, the PSE has also approved the P3.8 billion IPO of property developer Cebu Landmasters Inc.
“We commend both parties for successfully complying with PSE ‘s IPO requisites thereby enabling them to tap the stock market for their capital requirements. We encourage more companies to do the same, ” said PSE’s president Ramon Monzon.