ERC relaxes IPO timeline for power firms

MANILA, Philippines — The Energy Regulatory Commission (ERC) has eased the initial public offering (IPO) timeline for the power sector, offering smaller players more breathing room before going public.

This follows the amendments made to the public offering requirement (POR) guidelines to boost compliance and improve capital market access for generation companies (gencos) and distribution utilities (DUs).

Under the updated rules, the five-year compliance period to conduct an IPO will start only once the genco is already compliant with the Philippine Stock Exchange (PSE)’s listing requirements.

These requirements include a proven track record of profitability, positive stockholders’ equity, sufficient market capitalization, established operating history and a required number of stockholders.

The move provides companies with a more practical timeframe to prepare for their public offering while aligning the requirements with the PSE’s existing listing standards.

“The five-year compliance period isn’t new, it’s just a recalling. What we defined is when the five-year countdown starts,” ERC chairman and CEO Francis Saturnino Juan said.

Under the Electric Power Industry Reform Act, gencos and DUs that are not publicly-listed are mandated to offer and sell to the investing public at least 15 percent of their common shares.

Before the amendment, new companies were required to implement their respective public listings not later than five years from the issuance of their certificate of compliance (COC).

“If we didn’t do this (POR amendment) and simply counted the five years from the issuance of the COC, smaller gencos would be discriminated against because larger ones can immediately comply with the requirements by listing on the PSE right away,” Juan said.

The ERC chief said gencos struggle to comply with the IPO mandate because PSE listing requires a minimum market capitalization of P500 million, while securities registration typically involves meeting 23 requirements.

Aside from relaxing the listing timeframe, the ERC has also sharpened the definition of “holding company,” eliminating the past confusion about the scope of parent companies affected.

“When energy companies offer shares to the public, it allows Filipinos to invest directly in the industry that powers our nation. It also makes these companies more accountable to their investors and the consumers they serve,” Juan said.

Based on the latest ERC data, 49.6 percent or 131 of the 264 gencos in the country were not compliant with the IPO mandate, while the compliance rate was just 15.15 percent.