Water firm to raise P200M capital from public offering

CEBU, Philippines - Water company Abejo Builders Corporation (ABC) plans to enter into Initial Public Offering (IPO) soon, to raise at least P200 million capital from public investors.

This according to ABC president and chief executive officer (CEO) Gabino M. Abejo Jr., as the company is determined to further expand its water business especially in the Visayas and Mindanao markets.

He said ABC still has to prepare some preliminary requirements in entering into IPO, which may take the company two years to complete all the necessary documents.

This capital will add to the P1.5 billion capital expenditure (capex) allocated by the company to boost and expand its water sourcing and distribution businesses, he said.

Just like power, Abejo believes that water supply should be taken into serious consideration, as water demand is tremendously increasing not only in the urban centers, but also in the countryside.

At present, ABC is working closely with its financial advisers to determine the right time to get capital from the public investors, through IPO participation.

If the plan will be pursued, ABC will be the first water company in Cebu to enter IPO.

Abejo recognized the strong competition in the water business, saying despite offers of some foreign investors for partnership and joint venture with the company, it has to turn down offers, and opt to grow as a locally-owned and Cebuano company.

The P200 million minimum capital that will be raised by the company once it enters into the IPO, shall be utilized to provide water supply to ‘thirsty” areas in Southern Philippines, Abejo said.

Already, the P1.5 billion capex this year, is prepared for the completion of the ongoing contract negotiations with Local Government Units (LGUs) in Visayas and Mindanao, as well as expand the water supply capacity of the company.

Entering into the IPO, could push the company’s goal becoming one of the largest water suppliers in the Philippines, in both bulk and distribution supplies, he said.

Aside from water, the group also has other plans for expansion in other businesses, such as mining, tourism, and construction. However, more attention will be directed into its water business as of this time.

Today, ABC is providing the Metropolitan Cebu Water District (MCWD) a total of 17,000 cubic-meters –a- day.

With the infusion of P1.5 billion, excluding the P200 million it may raise from the IPO, the company expects to generate a total of 35,000 cubic-meters a day water supply, for both distribution and bulk water supply services.

As of 2009, ABC posted total sales revenue of P51.08 million, with standing assets of P143.9 million.

By 2012, the company targets to generate P380 million total gross sales assuming it can close the six project now being negotiated. (FREEMAN)