Metro Pacific eyes P16.9 billion from share offer to fund investments

MANILA, Philippines - Metro Pacific Investments Corp. (MPIC), the local flagship of Hong Kong-based industrial conglomerate First Pacific Co. Ltd., is eyeing up to P16.9 billion (approximately $345 million) from a planned share offering to enlarge its public float and fund its investments.

In a disclosure to the Philippine Stock Exchange, MPIC said it is selling P9.8 billion worth of shares either through a private placement or public offering with an option to increase it by another P4.9 billion (equivalent to $100 million).

The holding firm said it may exercise a 15 percent over-allotment option depending on market demand, which could increase the size of the offering to about P16.9 billion.

Based on initial estimates, the shares may be priced at between P3 and P3.75 each or at a 55 –93 percent discount to MPIC’s closing price of P5.80 per share yesterday.

“However, the actual offer price and the size of the proposed offering will only be determined upon completion of the roadshow, depending on investor demand and market conditions,” MPIC said.

The roadshow kicked off on Sept. 7 in Hongkong and Singapore and is slated to end on or before Sept. 18.

MPIC has tapped CLSA Ltd. as the stabilization manager whose responsibility would be to minimize or prevent the sharp decline of the shares’ market price.  As such, CLSA would only be allowed to buy shares from the market when the share price has fallen below the offer price so as to prevent undue price volatility.

The primary purpose of stabilization is to address 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. 

Only 2.7 percent of MPIC’s 9.42 billion shares are held by the public.

MPIC is investing over P60 billion over the next five years to expand its presence in healthcare, water distribution and toll roads as well as fund its venture 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. 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 has been earmarked to further grow the firm’s toll road business under Metro PacificTollways Corp. (MPTC). 

In addition, MPIC is pursuing a P12-billion deal with businessman Regis Romero for a 25-year contract to reconfigure the Manila North Harbor to modern specifications and expand the operational area from 52 hectares to 70 hectares. The port which handles more than 85 percent of the domestic containerized and breakbulk cargo, is expected to give a rate of return of 25 percent.

Also about P2 billion has set aside for the rehabilitation of its hospitals as well as the purchase of new equipment and facilities. MPIC has been aggressively building up its healthcare service portfolio in line with its vision to establish the first nationwide chain of premiere hospitals in the Philippines.