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IPO-tied North Star Meat sees a network of micro-hubs

MANILA, Philippines — North Star Meat Merchants Inc., the largest end-to-end frozen meat retailer in the country, is beefing up its war chest to build a massive network of micro-hubs nationwide while focusing on the rapid growth of the Food and retail industry in the Philippines after the pandemic.

In an interview with The STAR, North Star founder and CEO Anthony Ng said the company is planning a P4.5 billion initial public offering (IPO) to raise capital for expansion, particularly for the construction of micro centers in future growth areas of the country .

“First, we need a war chest to go after customers’ aggressiveness, not just SM Group, but anyone who comes by, like supermarket chains, because our style is synergistic,” Ng said.

North Star operates in all SM markets such as SM Supermarket, Hypermarket and Savemore; 7-Eleven, WalterMart and Alfamart in the Philippines supply frozen meat and other meat products.

As such, the company will have a presence in its customers’ growth areas, such as various areas outside of Metro Manila, including the fast-growing South Luzon area.

“The way to be prepared is to have micro-hubs. We call it micro-hubs because we’re not cold storage,” he said.

North Star’s micro-hubs include a mix of cold storage for all frozen meat, a carcass area, a pick and pack area and an expansive space for shipping new shipments. The size can range from 5,000 square meters to two hectares.

An investment for a micro-hub can start at around P200 million, Ng said.

When asked how many of these micro-hubs North Star plans to build, Ng said it will depend on where the focus of the company’s customer expansion will be. A customer already wants 5,000 new branches outside of Metro Manila.

“We’re not here for rent. We will be there to more efficiently serve the outlets we already have. So it will depend on the direction of SM and other customers like Alfamart, 7-Eleven, etc. Where they go, we will go,” Ng said.

Commenting on the planned IPO and the company’s value proposition, North Star CFO Jed Tan said, “We are a consumer-centric company.”

So if you look at other similar consumer stocks in the market, Tan said, even in times of crisis, these companies are unaffected when sales are actually rising.

Ng added that groceries are essential and people stock up on these products whether or not there is a crisis, but especially when there is a crisis like the one seen during the COVID-19 pandemic .

In its registration statement, North Star said it would offer up to 392 million common shares plus an over-allotment option of up to 58 million secondary common shares at a price of up to P10 per share.

The company expects to raise about 3.5 billion pesetas, which will be used for investments to expand its cold chain infrastructure, increase working capital primarily to reduce costs and expand North Star’s product lines.

North Star plans to begin the offering period next month and aims to go public before the end of the first half.

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