Topline cuts IPO size to P900M, eyes Q2 listing

Cebu-based fuel retailer Top Line Business Development Corp. (Topline) has lowered the size of its planned initial public offering (IPO) to around PHP 900 million from the previous PHP 3.16 billion after talks with potential institutional investors.

Amid adjustments to the IPO, Topline is aiming to be listed on the local bourse by the second quarter of this year, the company said in an e-mailed statement on Wednesday.

The company initially scheduled the IPO’s offer period from Nov. 27 to Dec. 3 last year, with a tentative listing date of Dec. 12. However, it opted to move the offer period to the first quarter of this year to accommodate institutional investors.

Topline said its IPO now consists of up to 2.15 billion primary common shares with an overallotment option of up to 214.84 million secondary shares. Its public float will be around 22% assuming the full exercise of the overallotment option.

The company slashed the indicative offer price to up to 38 centavos apiece from the previous up to 78 centavos per share, subject to a bookbuilding process.

Topline’s revised IPO offering is lower than the previous 3.68 billion primary shares with an overallotment option of up to 368.31 million secondary shares, corresponding to about 30% of total issued and outstanding common shares.

“We appreciate the interest shown by potential investors in supporting our expansion and growth. As such, we’ve adjusted our offer structure to reflect our adjusted capital requirements, and at the same time maintain regulatory compliance,” Top Line Chairman, President, and Chief Executive Officer Eugene Erik C. Lim said.

“We are excited to be the maiden IPO this year and the first company from Metro Cebu to go public in almost a decade,” he added.

Topline said its underwriters “expressed confidence in the offering’s structure, believing that the revised offer structure will position Top Line for strong momentum in the public markets.”

The company tapped Investment & Capital Corp. of the Philippines (ICCP) and PNB Capital and Investment Corp. as the joint lead underwriters and joint bookrunners for the offer.

“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% from 2021 to 2023 — outpacing the growth of constituent companies of the Philippine Stock Exchange Index (PSEi),” ICCP said.

“Topline’s ability to attract interest from institutional investors also speaks of their confidence in the company’s fundamentals and its promising trajectory. We are of the view that Top Line could be a growth catalyst for the capital markets in 2025,” PNB Capital said.

Sought for comment, AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message that the move by Topline was expected amid market conditions.

“We actually expected Topline to trim both the size and pricing of its IPO given the changes in market conditions since they initiated the process of going public,” he said.

“The previous valuation was quite high, and the market’s current appetite for risk likely won’t support those valuation levels. The current level of trade activity in the market also can’t support the IPO’s original size,” he added.

The PSEi dropped to 6,265.52 on Jan. 16, its lowest close in nearly seven months or since it ended at 6,158.48 on June 21, 2024, but has since recovered slightly.

On Wednesday, the PSEi improved by 0.12% or 8.13 points to 6,348.34.

“They’re 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,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“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.

Investors need to see not just a compelling story but a good bargain,” he added.

Topline is engaged in commercial fuel trading, depot operations, and retail fuel in the Visayas region.

The company has two subsidiaries, namely Topline Logistics and Development Corp., envisioned to engage in the importation, trading, distribution, and marketing of petroleum-based products, and Light Fuels Corp., involved in the fuel retail business.

The PSE aims to have six IPOs this year, with Topline among the expected companies to go public. – Revin Mikhael D. Ochave, Reporter