CIRTEK Holdings Philippines Corp., a manufacturer of semiconductors, saw strong demand for its P295-million initial public offering (IPO) after deal arrangers decided to cut the offer price amid uncertain market conditions.

Vicsal Investment Inc. president Senen Matoto said in a phone interview that the IPO, which ran from November 8 to November 14, was sold out on its first day.

“Demand was very good. It was oversubscribed [and] we had to stop selling after the first day,” said Matoto.

Vicsal Investments was part of an underwriting syndicate that also included Philippine Commercial Capital Inc. and Multinational Investment Bancorporation.

Cirtek Holdings, which completed the Philippines’s third initial share sale this year, had offered 42.16 million common shares at P7 each. The company’s trading debut is set on November 18.

The company decided to proceed with the IPO after cutting both the number of shares and maximum offer price to raise about 55 percent less than originally planned. Matoto said the IPO shares are valued at 7.5 times projected earnings for 2011.“In terms of timing, the market turned our way. We also decided to make the pricing attractive,."

Proceeds from the share sale would help double the capacity at its microchip manufacturing complex in Biñan, Laguna in the next three years. Cirtek Holdings said capacity will amount to almost 2 billion units of microchips once expansion is completed. 

Matoto said Cirtek Holdings is prepared to use its balance sheet to raise additional funds given the downsized IPO. A future equity sale could also be considered, he said.

Cirtek Holdings  earlier estimated that full-year net income could rise between 11 percent and 16.6 percent.

The forecast was made before the Philippine government reported last week that September export earnings, bulk of which from electronics and semiconductor sales, dropped 27.4 percent to a two-year low.

(Miguel R. Camus)