February 6, 2018 / 4:37 AM / 12 days ago

UPDATE 2-Del Monte's Philippine unit seeks IPO of up to $324 mln

* Del Monte Philippines to sell 20 pct stake

* IPO would be Philippines’ largest since October 2016

* Share sale would be SE Asia’s biggest for F&B since 2012 (Adds fund manager comments, milestones, background)

By Neil Jerome Morales

MANILA, Feb 6 (Reuters) - The Philippine unit of Del Monte Pacific Ltd said on Tuesday it plans to go public and raise up to $324 million this year, in what would be the country’s largest food and beverage initial public offering (IPO) on record.

Del Monte Philippines Inc’s planned sale of a fifth of its shares would be the country’s biggest IPO in 15 months and Southeast Asia’s largest for a food and beverage firm in nearly six years.

The announcement comes as domestic demand for consumer goods remains strong despite the prospect of rising prices due to higher taxes on fuel.

Del Monte Pacific said it sought for the Securities and Exchange Commission's approval of Del Monte Philippines' IPO, partly to pay existing loans. (bit.ly/2GSJzA4)

Del Monte Philippines will sell 559.46 million shares, or 20 percent of outstanding shares, at a maximum price of 29.88 pesos each, the company said in a disclosure to the Philippine and Singapore stock exchanges, where its parent is listed.

The majority of the IPO proceeds will be used to pay existing loans while remaining capital will be allotted for expansion.

“The prepayment of such loans will allow the Del Monte Pacific Group to de-leverage and strengthen its balance sheet,” the company said.

Del Monte Philippines hired BDO Capital & Investment Corp as the issue manager, sole global coordinator and sole bookrunner.

It would be the Philippines’ largest IPO since Pilipinas Shell Petroleum Corp’s $380.79 million share sale in October 2016.

For the food and beverage sector, it would be the Philippines’ biggest on record and the largest in the region since Felda Global Ventures Holdings Bhd’s $3.27 billion IPO in June 2012, Thomson Reuters data showed.

Del Monte Philippines produces and exports fruit juices, packaged pineapples and mixed fruits, and various tomato and spaghetti sauces under the Del Monte brand. Its parent firm, Del Monte Pacific, is listed on both the Philippines and Singapore bourses.

“Business-wise, they are still one of the leaders in their segment,” said Steven Kent Ko, fund manager at Rizal Commercial Banking Corp in Manila.

However, higher taxes could challenge Del Monte Philippines in the coming years, Ko said. Allotting most of the proceeds for debt payment makes the IPO less attractive, he added.

The Philippines’ broader share price index is up 0.67 percent year-to-date, trailing its Southeast Asian peers.

$1 = 51.5800 Philippine pesos Reporting by Neil Jerome Morales; Additional reporting by Elaine Tan; Editing by Martin Petty

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