MANILA, Philippines - Metro Pacific Investments Corp. (MPIC), the local flagship of Hong Kong-based conglomerate First Pacific Co. Ltd., will be conducting a book-building exercise to determine the selling price for its upcoming share offering amounting to up to $300 million.
MPIC has tapped CLSA Ltd. as the stabilization manager whose task would be to minimize or prevent the drastic fall of the stock’s market price.
CLSA would only be allowed to buy shares from the market when the share price has fallen below the offer price in order to prevent undue price volatility.
The Securities and Exchange Commission (SEC) approved last week CLSA’s proposed revisions to the existing stabilization guidelines to conform with internally accepted standard practices.
CLSA explained that the current stabilization guidelines do not allow stabilization activities to be conducted at a price between the initial offer price and the initial stabilizing price even if the initial stabilizing price is significantly lower than the initial offer price.
CLSA proposed that the initial stabilization action should be at a price no greater than the initial offer price or the issue price itself.
In approving CLSA’s request, the SEC said the proposed revisions would result in the harmonization of guidelines used in price stabilization by neighboring countries such as Hong Kong and Singapore.
The SEC added that the revisions would also encourage investors to participate in public offerings and give the stabilizing manager more room to maneuver as it would not limit them to further conduct stabilization activities.
The primary purpose of stabilization is to facilitate capital raising of corporations by addressing short-term fluctuations resulting from sudden increase in supply in the secondary market that would generally result in a decrease in the price of securities being offered.
MPIC will offer as much as 3.5 billion shares to institutional investors in Hong Kong, Singapore, the United Kingdom and United States. The share issuance is in line with efforts to boost the company’s public float and fund its investments. Out of the firm’s 9.42 billion shares, only 2.7 percent are held by the public.
MPIC is injecting over P60 billion in new capital over the next five years to expand its presence in healthcare, water distribution, tollroads as well as fund its foray into the ports services business.
Of the total, about P32 billion will go to the continued upgrade of Maynilad Water Services Inc.’s facilities and distribution network. The private water concessionaire for the West Zone is targeting to boost its billed volume by more than 70 percent and reduce its non-revenue water to 40 percent. Around P26 billion will be channeled to further grow its tollroad business, under Metro Pacific Tollways Corp. (MPTC).