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Developer bets on investors’ appetite

May 3, 2017

Cebu Daily News – Cebu Landmasters Inc. optimistic about local investors’ capacity to take on its IPO

As homegrown property developer Cebu Landmasters Inc. (CLI) anticipates to go public this month, a company executive expressed confidence the appetite of local investors was strong enough to take on its initial offering.

Jose Soberano III, CLI president and chief executive officer, said he was optimistic of the “absorptive capacity” of local investors.

“Within the local level, with the float we are looking at, which is P3.8 billion, I think the absorptive capacity of local investors, they have the appetite strong enough that this particular issue can be taken,” he said during the launching of one of CLI’s recent projects last week.

P3.8B target

The developer aims to raise as much as P3.8 billion from a stock debut this May in a bid to boost funds for expansion in key cities in Visayas and Mindanao.

CLI already received the go signal from the Securities and Exchange Commission (SEC) in April and expects to get the approval of the Philippine Stock Exchange (PSE) by the second week of this month.

Soberano said there were already those who have been asking about the Initial Public Offering (IPO), both friends and institutions, who have all sounded off their interest in the move.

“We cannot do official selling because of the constraints we have, but we do have indications from friends and those institutions. We are just happy about the support we are getting from various sectors,” he said.

Book-building process

Soberano said they still have to go through a book-building process, where the indications of various investors will be noted and then the price point per share will be established.

Once the company receives the formal license to sell securities from the PSE, that is the time they can come up with an offering bid, he explained.

“We are just as excited as them. When the time comes, then we can firm up their interest,” said Soberano.

SEC okay

The SEC earlier authorized CLI to sell 580 million shares at an offer price of P6.56 per share, consisting of 430 million primary shares, 75 million secondary shares, and another 75 million shares as an overallotment option.

CLI has tapped BDO capital to be the sole issue manager for its stock market debut, while joint lead underwriters and joint bookrunners are BDO Capital and BPI Capital.

First, sense of pride

Being the first Cebu-based real estate developer to apply for an IPO gives the company a sense of pride, Soberano pointed out.

“You seldom see local companies, especially from Cebu, doing an IPO. We take that with a sense of pride because in Manila, for example, when we were presenting it to the SEC, they really welcomed that possibility,” he added.

Franco Soberano, CLI senior vice president and chief operating officer, said this was an exciting time for the company as not a lot of IPOs come from the Visayas and Mindanao.

“We’re just happy to have this opportunity because it goes hand in hand with the growth we would like. We would be able to give more value to our stakeholders,” he said.

Leading developer

CLI is currently the leading real estate developer in the Metro Cebu residential condominium arena, with an 11 percent market share of the total supply of residential condominium units in Metro Cebu, second only to Ayala Land, according to a market study by CBRE Philippines (now Santos Knight Frank).

In the last 13 years, the developer has diversified from the residential segment into commercial, hospitality, industrial, and mixed-use project offerings which further distinguishes it from other real estate players in the Visayas and Mindanao area.

In 2016, CLI generated a net profit of P702 million out of P2.17 billion in revenues.

Its recent developments include residential condominium projects Mivesa Garden Residences and Midori Residences, identified by CBRE as the top-selling projects in Metro Cebu.

It also sells office projects and has teamed up with The Ascott Limited to develop Citadines Cebu City, which will open 190 serviced apartments by 2019.