Cebu-based fuel distributor Top Line Business Development Corp. (Top Line) has set the final price for its initial public offering (IPO) at ₱0.31 per share, lower than the adjusted indicative price of ₱0.38 per share.
Based on the final offer price, Top Line’s IPO will generate a total of ₱733 million instead of ₱900 million at the maximum indicative price of ₱0.38 apiece.
“The final offer price takes into account current market conditions while still ensuring that Top Line can pursue its strategic initiatives, including establishing new fuel stations and expanding its logistics capabilities with additional fuel trucks and tankers with its net proceeds,” the firm said in a statement.
It added that, “We are also very pleased with the strong coverage of our books at this offer price and believe it presents significant upside potential for prospective investors.”
Top Line is negotiating with a potential strategic investor who will come during the IPO. Top Line Chairman, President, and CEO Eugene Erik C. Lapasaran Lim said earlier that “we basically moved the (IPO) schedule because we were talking to potential institutional investors to come in.”
“In fact, it’s not only a potential investor. It’s a strategic investor in a logistics standpoint... So far, they have shown a lot of interest coming in... We’re still waiting but we’re hopeful that they will be joining us,” he added.
The firm recently reduced its IPO size from ₱3.15 billion to ₱900 million by reducing the number of shares, the offering price, and adjusting the allocation of expected proceeds.
“This decision reflects changes made to the IPO offer structure to accommodate potential block investments from institutional investors,” Top Line said.
The company is offering 2.15 billion primary common shares, with an overallotment option of up to 214.84 million shares.
Top Line seeks to use the net proceeds for its vertical integration strategy, allowing it to manage key aspects of its operations from sourcing to distribution, representing its commercial fuel trade and retail market segments.
“In view of the feedback from potential institutional investors, we have updated our expansion plans and IPO proceeds to focus on growing our current depot space, improving our importation processes, and expanding our operations.
“This approach will help us strengthen our market position to reliably supply fuel in the high-growth Central Visayas region and deliver more value to our shareholders in the long run,” said Lim.
Top Line intends to use a portion of the net proceeds to construct an additional 20 service stations under the Light Fuels brand, which are expected to be operational by 2025 to 2026.
With an emphasis on underserved sectors, Light Fuels will include Light Fuels Express stations among its target service stations. Express stations are designed with smaller space requirements and high motorcycle service turnovers.
Currently, Light Fuels has four operational stations, while six fuel stations are in various stages of construction and development. By the year’s first quarter, the company aims to have 10 operational stations, including three Light Fuels Express.
Subject to market conditions and project timelines, Top Line is targeting an expanded network of 30 operational Light Fuels stations by 2026, including the 20 stations to be funded by the IPO’s net proceeds.
The company also seeks to acquire one fuel tanker, with a capacity of five million liters, to enhance its fuel storage capabilities and ensure a reliable supply chain.
A portion of the net proceeds will also be allotted for working capital requirements for the fuel stock sourced from local and foreign suppliers. The rest of the proceeds will be used for general corporate purposes.
The construction of additional depot facilities initially included in the company’s prospectus filed last year will now be funded from other sources rather than the IPO proceeds.
“Through vertical integration, we are enhancing control over supply chain risks, paving the way for healthier profit margins, improved supply stability, and consistent product quality. The increased operational efficiency will sustain our expansion and growth momentum,” Lim said.