June 7, 2018 / 5:23 AM / 2 months ago

UPDATE 1-Del Monte Philippines delays IPO as stock market sinks

* IPO set to be Philippines’ biggest since October 2016

* Philippine stock market is SE Asia’s worst performer

* Property firm D.M. Wenceslao to price IPO on Friday (Adds analyst comments, economic context)

By Anshuman Daga and Enrico Dela Cruz

MANILA/SINGAPORE, June 7 (Reuters) - Del Monte Philippines Inc has postponed what would have been the country’s biggest initial public offering (IPO) since 2016, as a weak currency and high inflation drag down Southeast Asia’s worst-performing stock market.

The seller of canned fruits and tomato products aimed to raise up to 13.5 billion pesos ($258 million) in a share sale scheduled for pricing on Wednesday. About 30 percent of the offer was for foreign investors.

“International books for the IPO were covered but there’s a lot of nervousness among local investors,” said a person in the financial industry, who was not authorised to speak with media on the matter and so declined to be identified. “Everybody is in a wait-and-watch mode.”

Parent Del Monte Pacific Ltd said its bankers had recommended a delay. It did not indicate when the offering might take place.

Investor sentiment in the Philippines has declined along with the peso, one of Asia’s worst-performing currencies, which is down more than 4 percent against the U.S. dollar this year on concern about the size of the country’s trade deficit.

The benchmark share price index has fallen 10 percent since the start of the year. It was up 0.8 percent at midday.

The Philippines’ last sizeable offering was the 19.5 billion pesos IPO of Pilipinas Shell Petroleum Corp in 2016.

Property developer D.M. Wenceslao & Associates Inc is set to price its up to 10.87 billion pesos IPO on Friday.

“We are currently still on plan to price tomorrow for D.M. Wenceslao,” Reginaldo Anthony Cariaso, president of underwriter BPI Capital Corp, told Reuters by text message.

Analysts said investor appetite for IPOs has suffered from a glut of cheap stocks as the market declines.

“The reception is cool to these new issues because there are a lot of listed stocks that are priced cheaper now,” said Joseph Roxas, president of Eagle Equities. “The (IPO) pricing is a little prohibitive.”

Sentiment is also bearish due to persistent concern about high inflation resulting mainly from spikes in oil prices and partly from higher tax on certain commodities, Roxas said.

The economy grew 6.8 percent in January-March from the same period a year prior, mainly due to government spending. Analysts said growth would have been even quicker if inflation did not hurt demand. (Reporting by Enrico Dela Cruz and Neil Jerome Morales in MANILA, and Anshuman Daga in SINGAPORE; Editing by Edwina Gibbs and Christopher Cushing)

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