Gadget vendor sets P5.4-B stock debut

Retail group behind Octagon, Micro Valley, Gadget King plans to double store footprint

Computer hardware and software retailer Upson International Corp. is raising about P5.43 billion via an initial public offering (IPO) next month after sales of tech gadgets swelled during the COVID-19 pandemic.

Upson, founded nearly three decades ago by businessmen and company directors Ricardo Lee and William Lim, runs the country’s biggest chain of mall-based consumer electronics outlets.

It operates a nationwide store network via Octagon Computer Superstore, Micro Valley and Gadget King, which sell products from over 100 suppliers and brands such as Acer, Brothers Industries, Canon, Epson, Lenovo and Logitech.

Upson is offering as much as 986.84 million shares at an indicative maximum offer price of P5.50 per share, according to its IPO prospectus dated May 11.

First Metro Investment Corp. was hired as sole issue manager, book runner and lead underwriter for the IPO.

Based to the prospectus, the IPO price will be finalized on June 27 while the offer period will run from July 1 to July 7 this year. The company is targeting to make its Philippine Stock Exchange trading debut on July 15.

As much as P4.3 billion of IPO proceeds, equivalent to 789.47 million primary common shares, will be used to fund Upson’s expansion, the prospectus showed.

Upson chair Lawrence Lee is selling another 98.68 million shares under a secondary offer to raise P543 million. Lee may raise another P543 million worth of shares if an overallotment option for another 98.68 million shares would be fully exercised for postIPO price stabilization activities.

Upson, which is offering up to 30 percent of its shares to the public, will have a market value of P18.1 billion, based on the indicative offer price.

The company is raising funds to open 250 new outlets by 2026—more than doubling its presence to hit 433 stores nationwide. At the same time, it plans to expand its total retail space to about 50,000 square meters from 22,000 sq m at the end of 2021.

“There are rapid technological developments in computers and other IT products matched with growing market segments like educational needs and computer and IT-related jobs in all 17 regions,” Upson CEO and president Arlene Sy said in a statement on Monday.

“These are compelling opportunities that fuel the need for an aggressive expansion of our retail network nationwide,” she added.

The company also owns six warehouses to support operations. Three of these are located in Manila and one each in Cebu, Cagayan de Oro and Davao City.

It plans to add nine more warehouses in Metro Manila, Naga, Cabanatuan and Dagupan.

Despite the pandemic lockdowns, Upson grew annual revenues by 5 percent to P8.57 billion last year, while profit jumped 95 percent to P403.6 million. Compared with the prepandemic period in 2019, sales last year were up 13.2 percent while net income surged over 370 percent.

While considered the top mall-based electronics retailer, Upson cornered just 5.2 percent of domestic industry-wide sales of P157.3 billion in 2020, according to data from University of Asia and the Pacific-Center of Research and Communication Foundation Inc. Roughly 90 percent of sales still came from direct, online and institutional accounts, according to the study.