Shell employees’ share in IPO hailed

By Riza Lozada

A legislator has cred­ited Pilipinas Shell Petroleum Corp. (PSPC) for offering up to P184.25-million worth of common shares to its Fili­pino employees, alongside the oil refiner’s highly anticipated initial public offering (IPO) of up to P19.49-billion worth of shares from October 19 to 25. “We welcome Shell’s decision to enable its Fili­pino employees to become shareholders, and to par­take in the company’s future gains,” Surigao del Sur Rep. Johnny Pimentel, a mem­ber of the House econom­ic affairs committee, said. PSPC has priced its P19.4 billion initial public offering (IPO) at P67 per share, the upper end of its revised price range of P65 to P67 each.

PSPC, a subsidiary of Royal Dutch Shell, expects to list the offering at the Philip­pine Stock Exchange (PSE) on Nov. 3, it said in a statement. It will offer about 330 million shares for the long-delayed of­fering.

The bulk or 90 percent of the offering will be bought by the three selling sharehold­ers, namely Shell Overseas Investments BV, Insular Life Assurance Company Ltd. and Spathodea Campanulata Inc.

Shell’s allocation will amount to P13 billion, mak­ing it the major shareholder of PSPC with more than 55 per­cent shareholding, the state­ment said.

The remaining 10 percent of the IPO will be offered to the public, as required by the Oil Deregulation Law enacted in 1998, and proceeds of the sale will be used as capital ex­penditure, working capital and for general corporate expenses.

”Ours is a marketing-driv­en business operating in an economy that’s hitting a de­mographic sweet spot with growing affluence and mo­torization of consumers and growth in Philippine business­es focused on cash generation and return on capital,” Pili­pinas Shell Chairman Edgar Chua said.

Shell is offering up to 2,750,000 shares to all of its Filipino regular employees in the Philippines on the compa­ny’s payroll, and Filipino staff initially employed by the oil refiner but assigned to other Shell entities in the country, such as Shell Philippines Ex­ploration B.V. and Shell Shared Services (Asia) B.V.-Manila Branch.

Pimentel said the Novem­ber 3 listing of Shell’s shares at the Philippine Stock Ex­change (PSE) would enable Filipino families, the Social Security System, the Gov­ernment Service Insurance System and other public and private pension funds, life in­surers and charitable organi­zations to participate in the oil giant’s prospective earnings. Shell has said it intends to de­clare as annual dividends to shareholders at least 75 per­cent of its net earnings the year before, subject to conditions. “We are counting on the PSE and the country’s 132 li­censed stockbrokers to take advantage of Shell’s offering to lure many Filipinos to in­vest for the first time in the stock market, in the same way that the IPOs of Petron Corp. and the Philippine National Bank drew in thousands of first-time savers years ago,” Pi­mentel said.

The PSE seeks to in­crease the number of Filipinos with stock-market accounts to one million in the years ahead, from 712,549 in 2015. “We have high hopes that Shell’s listing would further build up the local stock mar­ket, and make it even more at­tractive to both domestic and foreign investors,” Pimentel said.

Besides directly and in­directly creating wealth for many Filipinos, the buying and selling of shares at the PSE has been a huge generator of income for the National Trea­sury, according to Pimentel, also a member of the House ways and means committee.

The Bureau of Internal Revenue collects a stock trans­action tax (STT) equal to one-half of one percent of the gross selling price of shares; a 12-per­cent value-added tax (VAT) on the commissions earned by brokers from every sale and every purchase of shares; and a final tax of 10 percent to 30 percent on cash dividends paid out by listed corpora­tions to their shareholders. From January to June this year, an average of P7.51 billion worth of shares were traded every day at the PSE, where the shares of 265 corpora­tions are now publicly traded. Shell, which runs an oil re­finery in Batangas City, is the country’s second-largest supplier of petroleum prod­ucts, with 23 percent market share, next only to Petron’s 30.4-percent, according to the Department of Energy’s 2015 oil supply/demand report. Shell is also the country’s third-largest corporation, next to Petron and Manila Electric Co., in terms of annual sales income, according to Securi­ties and Exchange Commis­sion (SEC) records.

Shell is offering to the public up to 18 percent of its common stock, or a total of up to 291 million shares at P67 per share, in compli­ance with the Downstream Oil Industry Deregulation Law, or Republic Act 8479. The law requires oil refiners to sell at least 10 percent of their common shares to the public and list at the PSE. The shares of Petron, which runs the country’s only other oil refinery in Limay, Bataan, are already publicly traded at the local bourse.

Chevron Philippines Inc. (formerly Caltex Philippines Inc.), the third of the so-called Big 3 oil firms in the country, closed down its San Pascual, Batangas, refinery in 2003, and has since been supplying the Philippines with imported finished petroleum products. Shell plans to raise P1.84 bil­lion in fresh capital from the offering of 27.5 million newly issued or primary shares. The company’s current stock­holders, including one of the nation’s largest life insurers, The Insular Life Assurance Co. Ltd., are also selling up to 263.5 million previously issued or secondary shares worth P17.65 billion.

Shell reported a net in­come of P5.07 billion from January to June 2016, up 28 percent from P3.96 billion in the same six-month period in 2015.

The oil refiner posted a net income of P3.60 billion in the whole of 2015; a net loss of P8.48 billion in 2014; a net loss of P912 million in 2013; and a net income of P4.79 billion in 2012.