Maynilad IPO in the pipeline for ‘early next year’

MANILA, Philippines — Pangilinan-led Maynilad Water Services Inc. is optimistic of undertaking an initial public offering (IPO) of its shares as soon as the “early part” of next year, encouraged by the overwhelming result of its recent maiden blue bonds issue.

Maynilad president and CEO Ramoncito Fernandez said the P15 billion they raised through the blue bonds “lays the groundwork” for the company’s mandated IPO.

The bond offering “showcased” the company’s financial strength and “readiness” to undertake “greater” responsibilities in the public sphere, Fernandez said.

“This blue bond offering is a step forward completing documentation, the requirements, the permits, etc.,” he told reporters on the sidelines of Maynilad’s listing of its blue bonds on the Philippine Dealing & Exchange Corp. yesterday.

“So we will be prepared to IPO as early as next year - early part of next year. The timing will be strategic move that we have to choose. Depending on market conditions, we will launch our IPO,” he added.

Maynilad is set to raise between P25 billion and P35 billion next year to bankroll its estimated capital expenditure of P35 billion to P40 billion, Fernandez said. The fundraising would be a combination of bilateral loans and other instruments.

“We will have to study the most efficient way to raise funds next year because we still have borrowing capacity from the bilateral. So, whichever is cheaper… we will have to go for the more efficient borrowing instrument.”

Fernandez said Maynilad is done with its fundraising for the year after generating a combined P25 billion from the blue bonds and an earlier bilateral loan.

The firm would use its internal generated funds if its capital expenditure exceeds P25 billion. The company earlier set its capex for the year at a record level of P31 billion.

Maynilad fully raised P15 billion from its maiden blue bond issuance, which also marked the firm’s first public bond offering.

The amount would form part of the water utility firm’s capex and would be used for its sustainable water and wastewater management projects.

The bond issuance was 2.47 times oversubscribed from its base issuance of P12 billion, allowing the firm to price the offering at the “tight end” of corresponding spread range for each series.

The Series A five-year fixed rate bonds due 2029 had a coupon rate of 6.0792 percent while the 10-year fixed rate Series B bonds due 2034 had a 7.0931 percent yield.

“The enthusiastic participation from institutional and retail investors attests to their confidence in Maynilad’s vision and in our commitment to sustainability. This successful start sets a promising precedent for our future fundraising endeavors,” Fernandez said.