Coal Asia ends IPO, reports high demand from investors

Published on Sunday, 14 October 2012 11:15

Written by Miguel R. Camus / Reporter

COAL Asia Holdings Inc. ends today the sale period for its P800-million initial public offering (IPO) as reports coming from sole underwriter Abacus Capital and Investment Corp. indicate that the issue was several times oversubscribed.

Jesus Mariano Ocampo, Abacus director for corporate finance, said in a phone interview on Friday that the broker’s allocation, which accounts for 30 percent of the IPO, was three times overbooked as of the official tally on Thursday.

He said the underwriter’s portion, which controls 60 percent of the allocation, was at least two times oversubscribed. “We have pretty much closed the books already. We’ve had to turn down quite a number [of investors].”

He added that the mix of investors came in at 60 percent on the institutional side and 40 percent from retail investors, although he did not discuss further details.

Traders interviewed on Friday noted that the huge demand partly came from the limited number of shares. Coal Asia offered 800 million primary shares at the par value of P1 each, which accounts for 20 percent of the company’s expanded capital. Each broker got 1.8 million shares.

The remaining 10 percent of the IPO was sold via the PSE’s local small investor program.

Coal Asia is the fourth company to go public this year. Its trading debut has been set on October 23.

The company is raising funds to finance the exploration and development of its Davao Oriental and Zamboanga-Sibugay coal mines to bring these to commercial production by 2014 and 2015, respectively

The coal mines are held through wholly owned subsidiary Titan Mining Energy Corp., which has identified 120 million metric tons of “potential deposit” for the Davao Oriental and Zamboanga-Sibugay projects combined, the company’s final prospectus showed.

A recently completed prefeasibility study on Davao Oriental indicated that the Davao Oriental project has “proved and probable” reserves of 7 million metric tons, the prospectus showed.

Following the IPO, five major shareholders owning 16 percent each will control the company. These are Dexter Tiu, Alexander Tiu, Jaime Ang, Gertim Chuahiong and Eric Roxas.

Coal Asia presently produces high-grade coal with a volume of less than 100,000 metric tons (MT) a year. By 2014, the production will ramp up to 600,000 MT per year. Net income is projected to reach P500 million by 2014, Coal Asia said before.    source