The PSE [link] approved the IPO application of NexGen Energy Corp. [XG 1.68 pre-IPO]. The tentative deal dates have the offer period running from July 1 through July 8, with a listing on July 16. The placeholder offer price will be updated or confirmed today. XG is a subsidiary of Pure Energy Holdings Corp. [PEHC] and a sister company of Repower [REDC 5.34 unch; 30% avgVol]. PEHC is owned by the Tiu Family. The preliminary prospectus [link] provides all the information needed to evaluate the deal, which is a firm offer of 300,000,000 primary common shares of XG, and an over-allotment option of 45,000,000 secondary common shares, at a price of P1.68/share, for a total potential deal size of P580 million.
MB bottom-line: I’m going to do a deeper dive on this once the pricing comes out, but this is exactly the kind of activity that we want to see on the PSE as both investors and as people who live and work here. Renewable energy development costs a lot of money. Solar and wind generation components have come down in price significantly over the past decade, but the projects still require a considerable amount of up-front cash to move forward through land acquisition, permitting, site development (roads and interconnections), and then all of the solar panels or wind turbines with their associated connection, maintenance, and monitoring equipment. If we want the PSE to shift from being a vanity showcase for rich dudes to flaunt their wealth to an essential component of the economic engine that can help fund our development, then these listings are a good sign that the exchange is trending in the right direction. This is not a recommendation to buy XG, and I’m not making an argument for the purchase of this IPO to be some kind of nationalistic expression; I’ll save my takes on this deal for when I’ve had a chance to really consume their prospectus. REDC has so far been a successful listing (it’s up 7% from its IPO), so there’s a history of deal success in its DNA. But it also shares renewable DNA with other listings like ALTER (-41%), ASLAG (-50%), and SPNEC (-8%) that have so far been quite negative experiences for their respective IPO buyers. Can the Tiu Family do it again?
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