By Sheldeen Joy Talavera, Reporter
THE DECISION of Maynilad Water Services, Inc. to proceed with its planned P45.77-billion initial public offering (IPO) in October signals renewed investor confidence in the local capital markets, analysts said.
“Maynilad’s decision to push through with its IPO is a welcome development that signals renewed investor confidence in local capital markets,” Peter Louise D. Garnace, equity research analyst at Unicapital Securities, Inc., told BusinessWorld on Aug. 30.
“We see healthy demand from both institutional and retail investors, viewing it as a defensive play,” he added.
Based on the company’s latest preliminary prospectus, Maynilad has set the offer period from Oct. 16 to Oct. 22. Listing on the Philippine Stock Exchange is targeted for Oct. 30.
Maynilad’s IPO consists of up to 1.66 billion common shares, including up to 24.9 million primary shares and 249.05 million overallotment option shares, priced at up to P20 apiece.
The secondary shares will be sold by the water provider’s principal shareholder Maynilad Water Holding Company, Inc.
Proceeds from the primary offering are allocated for capital expenditures and general corporate purposes. Maynilad will not receive proceeds from the sale of secondary shares.
“As one of the largest IPOs in the local bourse, we see Maynilad’s listing to boost trading activity in a rather anemic market,” Mr. Garnace said.
“The success of Maynilad’s listing could act as a catalyst, potentially unlocking a pipeline of companies waiting for more favorable market conditions.”
Juan Paolo E. Colet, managing director at China Bank Capital Corp., said positive investor interest in Maynilad’s IPO is expected to translate into “healthy demand once the offer has been set.”
“Orders should be particularly strong if the final IPO price implies a dividend yield of around 4.5 to 5%,” Mr. Colet said.
“Maynilad is a defensive stock that should do well across market cycles. It also helps that rival Manila Water’s stock price has been performing well, so many investors have a favorable view of the sector,” he added.
The company moved the listing date of its IPO to no later than end-October from the initial schedule of July 17, citing potential demand from cornerstone investors.
In July, Maynilad Chairman Manuel V. Pangilinan said the company had secured a firm commitment from one of its two intended cornerstone investors to participate in the IPO.
Under the terms of its legislative franchise, Maynilad is required to offer at least 30% of its outstanding capital stock to the public by January 2027.
Maynilad’s IPO will be the second for the year, following Cebu-based fuel retailer Top Line Business Development Corp.’s P732.6-million offering in April.
Pangilinan-led conglomerate Metro Pacific Investments Corp., which holds a majority stake in Maynilad, is one of three Philippine subsidiaries of First Pacific Co. Ltd., alongside Philex Mining Corp. and PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.