First Gen completes international roadshow

First Generation Holdings Corp., the listed holding company of the Lopez Group for its power generation and energy-related businesses, completed Thursday its international roadshow, raising nearly P7 billion after cutting the share price for its initial public offering below the initial targeted range.

First Gen has set the IPO price at P47 per share and settled for an offer size of 180.9 million shares. The final offer price is below the bottom end of the indicated range of P51 to P62. The company initially earmarked as much as 219.9 million new shares for the offering.

In a disclosure to the Philippine Stock Exchange, First Gen said 80 percent of the 180.9 million shares was sold in the United States.

The IPO, the country’s first in 2006, will start on Jan. 31 while the listing has been scheduled on Feb. 10.

First Gen said the reduction in offer price was in response to foreign investors’ request that the shares be offered at a more attractive price to the investing public.

The reduced offer price will result in lower proceeds of P8.5 billion, or around $157 million, from the earlier target of P11.2 billion, or $200 million.

Proceeds from the offering will be used for improvements in existing facilities, investments in capacity expansion, which may include both potential acquisitions of power generation assets and the development of greenfield projects.

CLSA Ltd. and UBS AG are the international underwriters of the IPO. ATR-Kim Eng Capital Partners Inc. and BDO Capital & Investments Corp. are handling the local offering.

Traders expressed mixed reactions yesterday on First Gen’s move to lower its IPO price to P47 a share. First Philippine Holdings Corp., the parent company of First Gen, closed unchanged at P49 but the stock hit an intraday low of P47.50 on news that First Gen further reduced the price of its IPO shares.

First Grade Holdings managing director Astro del Castillo said while the reduced IPO price may attract more investors, he said there are apprehensions that the financial problems hounding its sister companies may affect the saleability of First Gen’s shares.

Some investors expressed concerns over

First Gen’s long-term contracts to supply power to Manila Electric Co.

Analysts said the demand for First Gen shares has also been affected by the share offering of Universal Robina Corp., the food manufacturing arm of Gokongwei flagship firm JG Summit Holdings Inc.

There were also concerns over First Gen having only one buyer for its electricity — its sister company Manila Electric Co., currently the country’s largest power distributor.

Accord Capital Equities Inc.’s Ron Rodrigo said that First Gen’s final offer price is fairly valued.

In the nine months ending September 2005, First Gen posted a net income of P3.65 billion or 1.4 percent lower from the previous period. For 2004, its full year profit was P4.96 billion or a 6.9-percent drop from a year earlier.