Megawide sells 292 mln shares; SM Group takes 20 pct stake

02/18/2011 - Megawide Construction traded flat in its market debut, as a weak broader market tempered initial gains after the firm raised 2.3 billion pesos ($53 million) in the Philippines' first initial public offering of the year.

Megawide shares rose as high as 7.95 pesos on Friday, 1.4 percent above its offer price of 7.84 pesos in a listless market . The stock later closed flat, while the broader market closed down 0.4 percent.

The construction and engineering company, now valued at $155 million, sold 292 million shares or 34 percent of its issued and outstanding shares, with its biggest client -- the SM group of the country's richest man Henry Sy -- taking a 20 percent stake through a privately held company.

The IPO was about three times oversubscribed amid a generally bearish market, said Eduardo Francisco, president of issue manager and underwriter BDO Capital & Investment Corp.

Philippine stocks have fallen almost 8 percent so far this year, one of the worst performers in Southeast Asia. Fears over food inflation have weighed on general investor sentiment toward Asian equities.

Still, analysts said the outlook for Megawide, the first construction company to list on the Philippine Stock Exchange in 35 years, was positive.

"We think there's an upside because it's undervalued and growth prospects look good for the next two years," said Jose Vistan, research head at AB Capital Securities.

"But the rise (in shares) was tempered partly because of the timing of its entry. At best, the market is just consolidating at the moment."

Last week, shares in airline PT Garuda Indonesia plunged 17 percent on their trading debut, in a sign that investors have turned cautious towards Indonesian markets.

Megawide will use proceeds from the IPO to build a 1-billion peso concrete manufacturing plant, acquire new machineries and equipment, and finance general working capital requirements.

Chief executive Michael Cosiquien said the company, a partner of the Sy group's property development arm SM Development Corp , was looking to boost future revenue through projects targeted for the mass housing market. (

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