San Miguel Corp, the Philippine food and drinks group that is rapidly diversifying into energy and infrastructure, listed preferred shares worth 80bn pesos ($1.9bn) on the Philippine Stock Exchange on Friday, capping a month-and-a half long capital raising exercise said to be the country’s biggest to date.
The successful sale of more than a billion preferred shares is a big boost to San Miguel, whose push into new sectors such as airports, toll roads and light rail systems has make it less attractive to risk-averse investors in common shares. San Miguel common stock has lost 6.5 per cent of its value this year, even as the benchmark Philippine Stock Exchange index rose more than a fifth.
With dividend yields ranging from 7.5 per cent to 8 per cent, San Miguel’s Series 2 preferred shares, redeemable in three to seven years, offer a higher return than most money market and deposit instruments, according to stock brokers who helped sell the shares.
“Most of the preferred shares were sold by the banks to their traditional fixed-income clients,” said Joseph Roxas, a Manila-based stock broker. “They sold more than what we stock brokers sold to equity investors.”
San Miguel said the issue attracted both retail and institutional investors “seeking higher yields in a low-interest rate environment”.
Ramon Ang, San Miguel’s president (pictured), said: “Our presence today points to our company’s commitment as an active participant in the capital markets and a value creator for the many investors who hold San Miguel shares or bonds.”
Most of the new preferred shares will be used to redeem the first series of preferred shares issued in 2009 to buy out common shareholders who were not comfortable with San Miguel’s strategic shift from its core food and drinks business to heavy industry. The previous preferred shares carried a yield of 8 per cent.
The new preferred shares were sold at 75 pesos each and do not carry the right to vote in shareholders’ meetings.
San Miguel began diversifying five years ago and has since acquired strategic stakes in the country’s biggest petrol refiner, its biggest electricity distributor and its biggest airline. It has also gained a foothold in coal mining and copper and gold mining.
“Ever since we embarked on our diversification strategy in 2007, our goal has been to make a deep and lasting positive impact on the Philippine economy through our businesses,” Ang said. “The fast-changing industries that we have chosen to participate in are challenging, but they also provide us with the greatest opportunities to stay ahead of the curve, grow even further and make a difference.”
San Miguel part 2: delisting, beyondbrics
San Miguel: keeping the family out of it, beyondbrics
San Miguel: jetting off, Lex
Philippine Airlines: fleet footed, beyondbrics
San Miguel sets the stage for bigger ventures, FT