Quorn-maker’s IPO drives top funds ditching ‘stocks’

Bloomberg

Food giant Monde Nissin Corp’s record-breaking entry into the Philippine stock market is driving a shakeup that’s impacting everything from the nation’s consumer sector to holdings of some of the biggest money managers.
Investors say the $1 billion initial share offering — the biggest ever debut in the Southeast Asian country — is pushing them to reallocate funds from existing consumer-staples holdings and even sell blue-chip stocks from other sectors to pay for a slice of the iconic snack brand that debuts on June 1. Average volume on the benchmark stock index is up nearly one-third since the IPO filing compared with the start of the year.
Overseas heavyweights including Singapore state investment fund GIC Pte and Hong Kong insurer AIA Group Ltd have also taken stakes in the Quorn maker, which has won favour for its prospects in the fast-growing global market for alternatives to meat. The company’s dominant position in the Philippines for basic foods like noodles has added to its allure because of the strong revenue stream it provides during economic downturns.
The blockbuster share sale is providing a rare bright spot for a market that until last week was the most unloved in the world. Monde is attracting foreign investors even as they exit the broader market as the Philippines struggles with one of Asia’s largest Covid-19 outbreaks. “The switch started as early as when the IPO was approved and it’s partly driving the market weakness and foreign fund withdrawals,” said Gerard Abad, chief investment officer at AB Capital & Investment in Manila. Abad said Monde will be his largest investment in the consumer
sector. The Philippine Stock Exchange Index is down 6.5% this year, having pared much of its losses recently on expectations that pandemic-linked restrictions will ease.
“It makes sense too for investors to trim and shift money to Monde,” said Fritz Ocampo, chief investment officer at BDO Unibank. Ocampo, who helps manage about 1 trillion pesos of investments, said there was selling in Monde competitors such as Universal Robina and San Miguel Food and Beverage, as well as large stocks that are part of the Ayala, SM Investments and Gokongwei groups.