JAPANESE group Suntory Beverage and Food Ltd will raise ¥388bn (£2.58bn) after setting its IPO price near the bottom of its marketing range, hurt by concerns about its
valuation and weak appetite amid market volatility.
The food and soft drinks unit of Suntory Holdings yesterday set the price of its initial public offering at ¥3,100 per share, compared with its ¥3,000 to ¥3,800 indicative range.
The maker of Orangina soft drinks in Japan had been seeking as much as ¥470bn in Asia’s biggest IPO so far this year, to bolster its war chest for acquisitions in emerging markets like south east Asia and boost its competitiveness against rivals like Kirin.
“It’s obviously a sign that the stock is not popular among institutional investors,” said a hedge fund manager based in Singapore, who was not authorised to discuss the matter publicly.
“Given its valuation compared with its peers and high volatility in the market, I think even the price of ¥3,100 is too high for many institutional investors,” he said.
The IPO price values Suntory Beverage at a price-to-earnings ratio of 23 based on its 2013 profit forecast. That is higher than 17 at domestic rival Asahi Group and 16 at Kirin, according to Thomson Reuters data.
At the IPO price, Suntory Beverage would have a market capitalisation of ¥958bn, smaller than both of its rivals.
Suntory Beverage’s IPO was also seen as a test of investor appetite for new listings at a time of high volatility in Japanese stock markets.
The benchmark Nikkei has lost about 18 per cent since hitting a five-and-a-half year high in late May.
Still, the offering is almost twice the size of the $2.1bn IPO by the infrastructure fund of Thailand’s BTS Group Holdings, the second-biggest Asia IPO this year.
The float provides Suntory with the funds to ramp up its acquisition drive.