TOP Line Development Corp. has moved its planned initial public offering (IPO) to later in the year and also slashed the size and price, given current market conditions.
The Cebu-based fuel retailer, which last November said it was rescheduling the IPO — originally set to be held before the end of 2024 — to sometime in the first quarter of 2025, on Wednesday said it was now looking at a second quarter listing following talks with institutional investors.
The reason cited last November was that of giving investors more time to conduct due diligence. Then and now, analysts said the move was due to a stock market downturn.
Top Line said it would now be offering up to 2.15 billion primary common shares with an overallotment option of up to 214.84 million secondary shares, lower than the previously announced 3.68 billion primary shares and 368.31 million secondary shares.
The company also slashed its indicative offer price to up to P0.38 per share from P0.78, subject to a bookbuilding process, which means that it will only raise a little over P900 million should all shares be sold, substantially lower than the P3.15 billion originally expected.
"We believe that the revised offer structure makes this IPO an attractive investment opportunity for investors seeking strong value and growth given the company's compounded annual revenue growth rate of more than 49 percent from 2021 and 2023 — outpacing the growth of constituent companies of the Philippine Stock Exchange index," said Investment & Capital Corp. of the Philippines, the joint lead underwriter and bookrunner along with PNB Capital and Investment Corp.
PNB Capital said, "Top Line's ability to attract interest from institutional investors also speaks of their confidence in the company's fundamentals and its promising trajectory," adding that "[w]e are of the view that Top Line could be a growth catalyst for the capital markets in 2025."
Top Line Chairman, President and CEO Erik Lim said the company appreciated the "interest shown by potential investors in supporting our expansion and growth" and was excited to be the year's maiden IPO and the first Cebu-based firm to go public in almost a decade.
"This milestone is not just for our company but also serves as an inspiration for other businesses outside Metro Manila to take the leap, embrace growth, and confidently enter the market to be on TOP," he also said.
The capitalization of the word "top" is an apparent referral to the stock symbol that Top Line will be trading under when it joins the stock exchange.
Sought for comment, China Bank Capital Corp. Managing Director Juan Paolo Colet told The Manila Times that Top Line was a "promising company, but it's a very tough IPO market, so I'm not surprised that they cut the deal size and price to make the offering more attractive."
"With the stock market trading near the low end of its 52-week range, and given the uncertainties around Trump 2.0 and our midterm elections, it's generally challenging for companies to do an IPO," he added, noting that investors would need to see not just a compelling story but a good bargain.
The Philippine Stock Exchange index (PSEi) fell below the 7,000 level last November from around 7,400 a month earlier in the wake of Donald Trump's winning the US presidential elections and worries over the impact of his protectionist policies on interest rates.
The benchmark index closed at 6,348.34 on Wednesday, rebounding from a two-day decline. It hit a near seven-month low of 6,265.52 last Thursday.