Axelum ready to face the public

Back in 1986, the town of Medina in Misamis Oriental was dark and dreary.

The meat vendor in the market could barely sell half of the pork carved out of a single pig, even on a Sunday.

The people were desolate. The town’s biggest employer, a coconut manufacturer, had gone bankrupt and was dormant for almost a year.

Longtime employees could not collect their retirement pay.

This was the bleak situation that greeted Henry Raperoga, then a 27-year-old certified public accountant who had just returned from Saudi Arabia.

He came to town as part of a team hired by a white knight to take a look at the shuttered factory and negotiate with the stakeholders.

He and Romeo Chan, a management professional he had worked with during his overseas stint, teamed up with engineers Jose Armando Nañawa and Paul Rene Tayag, former employees of the old owners of the dormant factory.

In October 1986, they took over the factory and founded the Fiesta Group, forerunner of Axelum Resources Corp.

At that time, they were working for the group that bought the foreclosed factory from the creditor-banks.

But as they grew the businesses and built new ventures, each acquired a sizeable block by exercising stock options and using their bonuses to buy more shares.

A share swap involving another venture outside the coconut business allowed them to buy out their former employers.

They eventually consolidated all the assets into Axelum, now the country’s largest exporter as well as the only fully integrated coconut manufacturing facility.

Raperoga is now the president and chief operating officer while Chan is the chair. Nañawa is senior vice president and head of US operations while Tayag is senior vice president, chief technical and compliance officer and head of European and Asian marketing.

On any given day, Axelum processes around 600,000 to 700,000 coconuts purchased from small farmers within a 250-kilometer radius from its facility.

It employs 5,700 people, making it the single biggest employer in Medina.

Weekly payroll is something like P8 million to P10 million, excluding daily spending for coconut purchases.

To think that in the beginning, the new team didn’t know how to run a coconut business. But they did know how to manage people and rally them into breathing new life into the factory.

Axelum ready to face the public
Some of Axelum’s coconut products that are available in local and overseas markets

The first shipment to a Japanese buyer was a disaster but over the years, the group rebuilt the business, regained the confidence of its predecessor’s old clients, signed up new ones, upgraded and expanded facilities, invested in research and development to come up with innovative new products, and proved itself worthy of much-coveted international certifications and accreditations into the supply chain of major global brands.

Kellogg’s, Quaker, Nestlé, Russell Stover, Unilever, Kroger, Mondelez International, Ferrero, Kraft Foods, General Mills, Campbell’s, Mars, Cadbury Schweppes and Calbee are just among the global brands that Axelum serves.

It has also cornered a big chunk of the private label coconut business in the United States, supplying 26 of America’s top 72 supermarkets chains. 

Axelum’s biggest cash cow, accounting for 35-40 percent of total business, is desiccated coconut.

Made from shredded high-quality pure white coconut meat and dried to retain the natural flavor and aroma of coconut, this is an ingredient used by confectioneries and bakeries all over the world.

Coconut water, on the other hand, accounts for 25-35 of gross revenues. This is processed using advanced UHT (ultrahigh-temperature)-technology to preserve the quality and flavor of natural coconut water.

Under this segment, the company produces pure coconut water for Vita Coco and Costco Kirkland as well as other private label brands for export.

Other products include coconut milk, coconut milk powder and reduced fat coconut.

Aside from these, Axelum also sells its own line of coco products under the Fiesta and Fiesta Tropical brands.

About 88 percent of its business is meant for export. These days, it has distributors and brokers all over the world, including company-owned marketing offices in Australia and Spain.

The United States is Axelum’s single biggest market, accounting for about 55-60 percent of consolidated sales, including the coconut water business.

It operates a hub in Atlanta that is a marketing, warehousing and production facility rolled into one.

This is the kind of facility that the group wants to replicate in other parts of the globe. 

“We want to expand that reach to have a footprint in South America and elsewhere. We are looking at Ecuador and Chile,” he says.

The group is also looking for acquisition opportunities within the region, particularly in Vietnam and Indonesia.

Out of its existing facility in Medina, Axelum’s production capability is seen to be highly scalable.

Despite being in a labor-intensive business, Raperoga says Axelum has never had labor problems because of Axelum’s good treatment of its employees and the community.

Axelum, for example, is involved in training farmers in organic farming, cervical cancer detection and treatment and tuberculosis care and management.

About a thousand of its scholars have graduated from college and they were not required to work with the company.

It is now making plans to build a hospital for the community.

The company was named Axelum to mean “accelerating the light of the Lord.”

After all, its top leaders believe that they are not running this business for their own gain but in the service of God.

With its upcoming initial public offering (IPO), Axelum will be the first pure coconut product manufacturer to list on the stock market. 

It plans to sell as much as 700 million primary common shares plus 430 million existing common shares or part of the shares held by Singaporean private equity firm CP Compass Singapore Pte. Ltd.

At the maximum price of P6.81 a share or round 21 to 22 times projected earnings, the equity deal can reach as much as P7.7 billion.

Axelum has received the green light to conduct its offering from Sept. 24 to 30 and list on the Philippine Stock Exchange’s (PSE) main board under the trading symbol AXLM on Oct. 7.

First Metro Investment Corp. and BPI Capital Corp. act as joint lead underwriters for this IPO.

In the last three to five years, Axelum has grown organically by 10-15 percent annually.

The pace is expected to accelerate with fresh capital from this IPO.

The management has also committed to pay out dividends equivalent to 20 percent of previous year’s earnings.

“We have realized that we have already put up all the necessary infrastructure and we have seen the market growing at a faster pace than what we used to have,” Raperoga said. “Today, the market opportunity is actually in leaps and bounds. And we want to take advantage of that.”
By: Doris Dumlao-Abadilla /Philippine Daily Inquirer 

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