Niche property leasing and asset management firm Kepwealth Property Philippines, Inc. (KPPI) is set to become the country’s first company to initiate an initial public offering (IPO) for this year. This comes after the Philippine Stock Exchange (PSE) gave its green light to the company’s planned PHP384.8 million stock debut at the local bourse.
KPPI is a company incorporated in September 2005 and is involved in developing and managing office, residential, agricultural, and commercial properties including apartments, inns, hotels, and resorts.
Regulators okay Kepwealth’s IPO
PSE said on its website on July 26 that it has approved the property developer’s plan to issue around 67.032 million common shares worth PHP5.74 apiece in its IPO.
The approval followed the announcement made by the Securities and Exchange Commission (SEC) en banc, which cleared KPPI’s application of a maximum of 201,057,609 common shares to be listed and traded in the PSE during its July 23 meeting.
Ramon S. Monzon, PSE President and Chief Executive Officer, said in a statement: “It may have taken some time before we had our first IPO but I am pleased that KPPI is embarking on its maiden share sale.”
Monzon added that he hopes that the move will encourage other firms that held back their IPO plans to reconsider the stock market as an excellent channel to raise their capitals.
“I am also pleased that we have a new listing on the SME board. I hope this will prompt companies who qualify to list on this board to explore the possibility of raising funds through an IPO,” he said.
KPPI’s final IPO price is set to be determined on Aug 01, while the offer period will run from Aug 05-09.
According to offering circular posted by the local bourse, shares of the property developer will be tentatively listed on Aug 19 on the small, medium and emerging board of the PSE. It will use the stock symbol “KPPI”.
KPPI was formerly owned by Keppel before its 100-percent stake was divested to Euro Capital Land in 2017 for PHP793.6 million. At present, Euro Capital just own 12% of the company while the rest of its stakes are shared by Crown Caste Holdings (56.4%) and We Serve 24 Hours (25.6%).
Upon listing, KPPI will have a public float of 33.34% and a PHP1.154 billion market capitalization. The company expects net proceeds amounting to PHP 363 million which it intends to use to diversify its asset base and to acquire around 3,500 square meters (sqm.) of office space for leasing purposes. Post-acquisition, KPPI will have approximately 18,121 sqm. of leasable space under its portfolio.
From the first to the second quarter of 2020, the property developer will acquire office spaces worth PHP245 million in Makati City, Pasig City, and Quezon City. It will also buy another PHP120 million worth of office spaces in Davao in the second quarter.
KPPI currently manages, residential, office, and commercial units in various buildings in Metro Manila, including 98 units in Icon Macapagal, 91 units in Burgundy Corporate Center, 79 units in Medical Plaza Ortigas, 59 units in Burgundy West Bay Tower, 43 units in Atrium Mall, 29 units in Vivaldi Residences-Cubao Commercial Space, and six units in Oxford Suites.
KPPI also entered into an agreement for the management of 96 units of Luxe Madrigal in April.
In Cebu City, the company also has 77 office condo units with 98 leasable spaces in Kepwealth Center, a commercial building located in Samar Loop corner Cardinal Rosales Avenue, Cebu Business Park.
According to KPPI, the planned acquisitions will minimize the concentration risk of its existing operations in Cebu City. It also believes that the properties will bring about additional recurring revenue streams as soon as they are leased out to tenants.
KPPI has appointed BDO Capital and Investment Corp. as the sole bookrunner, underwriter, and sole issue manager for the transaction.
The property developer also intends to invest in short-term liquid investments, which are expected to earn prevailing market rates. That includes money market placements, bank deposits, and short-term government securities. Internally generated funds will finance any shortfall from investments that might incur losses.
Other companies are slated to do an IPO in the local market this year, including Villar company All Home Corp and manufacturer Axelum Resources Corp.