The richest man in the Philippines is set to see his supermarket IPO sizzle

Manila

ALLDAY Marts, a supermarket chain founded by the richest person in the Philippines, is poised to jump in its trading debut thanks to heavy retail investor interest.

AllDay's offer was about 4 times oversubscribed, with the company and billionaire Manuel Villar raising a combined 4.52 billion pesos (S$120 million) by selling 7.52 billion shares at 60 centavos each.

Trading is scheduled to begin Wednesday (Nov 3) in Manila.

"The interest from retail investors is quite strong," said Andrei Soriano, an analyst at AP Securities. "We got a lot of inquiries and many of our clients subscribed to the IPO (initial public offering). They expect this will be another MerryMart."

Its peer MerryMart Consumer surged by the 50 per cent daily limit from its IPO price in each of its first 3 trading days in June 2020. Shares have tripled since they listed, though off their January peak.

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AllDay is debuting at a time when the Philippine IPO market is booming. Six deals have raised a record US$2.33 billion this year, Bloomberg-compiled data show.

Villar, whose fortune is US$7.3 billion according to the Bloomberg Billionaires Index, is a draw for investors, say analysts, as is AllDay's low nominal IPO price. The firm should be able to meet its target of tripling its stores in 5 years, they say, as Villar can provide locations through his Vista Land & Lifescapes, a builder of residential, office and retail developments in 147 cities and towns nationwide.

AllDay's IPO price of 60 centavos is "reasonable" relative to MerryMart, which priced its float at 200 times forward earnings and had just 7 outlets when it went public, said AP Securities' Soriano.

AllDay, which already has 33 stores, has a multiple of 31.1 times its 2022 earnings at the offer price.

The supermarket group targets the "affluent mid-premium segment", where its market share has widened to 9.5 per cent in 2020 from 6.9 per cent in 2019, according to a COL Financial Group report.

It plans to use 20 per cent of the net proceeds from the sale of new shares to expand.

AllDay will use the remaining proceeds from the new shares to pay down debt, helping save 206 million pesos in annual financing costs, according to its prospectus.

The reopening of the Philippines' pandemic-hit economy and increased campaign spending ahead of the May 2022 presidential and national elections are also favourable for AllDay. "Reopening means more employment and consumer spending while the elections will help boost spending capacity of households," noted Manny Cruz, a strategist at Papa Securities. BLOOMBERG