By Revin Mikhael D. Ochave, Reporter
WEST ZONE concessionaire Maynilad Water Services, Inc. said it plans to raise up to P49.15 billion through an initial public offering (IPO) within the next two quarters.
The IPO’s indicative terms include a base offer of up to 1.81 billion common shares, an overallotment option of up to 266.31 million common shares, and an upsize option of up to 379.29 million common shares, with an offer price of up to P20 apiece, Maynilad said in a disclosure to the Philippine Dealing System Holdings Corp. dated March 14.
Maynilad’s board, led by Metro Pacific Investments Corp. (MPIC), approved the IPO’s registration and offering during a meeting on March 14.
“It [IPO] should be in the next two quarters,” Maynilad President and Chief Executive Officer Ramoncito S. Fernandez said during a media briefing in Pasig City last week.
“The company is preparing so that it can be push-button (ready) within this year, depending on different factors like macroeconomic and geopolitical. That’s where we are today,” he added.
Asked about possible delays, Mr. Fernandez said the “sweet spot” for Maynilad’s IPO is this year.
“If we push it next year, we might be running out of options already. The sweet spot, really, is this year,” he said.
“We already have banks helping us. We have HSBC, Morgan Stanley, UBS, and Bank of the Philippine Islands assisting us,” he added.
Signed into law on Dec. 10, 2021, Republic Act No. 11600 granted Maynilad a 25-year legislative franchise until 2047 to establish, operate, and maintain a waterworks system, as well as sewerage and sanitation services, in the West Zone service area of Metro Manila and Cavite province.
The law also mandates that Maynilad must offer at least 30% of its outstanding capital stock within five years from the franchise grant.
“This is the kind of IPO that can potentially do well amid current market conditions. Maynilad will be regarded as a defensive stock and a dividend play, so it’s something many institutional and retail investors would consider buying. It also helps the IPO story that they got a huge earnings boost last year mainly due to tariff adjustments,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“I think the offer shares can be fully taken up since this will be marketed to both offshore and domestic investors. Having a strong syndicate of foreign and local banks to support the deal will be very important to its success,” he added.
In 2024, Maynilad’s core net income grew by 40% to P12.8 billion due to lower operating expenses. Revenue rose by 23% to P33.5 billion, driven by tariff adjustments and higher billed volumes.
“Based on its indicative terms, Maynilad could potentially raise up to P49 billion, assuming the highest offer price and full exercise of all share options. This fundraising exercise will support Maynilad’s expansion plans, as it has earmarked at least P30 billion for capital expenditures (capex) in 2025,” Unicapital Securities, Inc. Equity Research Analyst Peter Louise D.C. Garnace said in a Viber message.
Maynilad previously said its 2025 capex budget could exceed P30 billion, allocated for water and wastewater projects, non-revenue water management programs, and ongoing plant construction.
The company spent P25.75 billion in 2024 to upgrade its water and wastewater infrastructure.
Maynilad is among six IPOs expected on the Philippine Stock Exchange (PSE) this year.
“Market conditions improved recently, with the PSE index (PSEi) at 1.5-month highs, alongside some net foreign buying over the past two weeks. A stronger PSEi and continued net foreign buying would support a higher share price, maximizing proceeds for the issuing company,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Stable to improving market conditions, shaped by both local and external factors, will also determine demand for the share sale, especially if investors see market gains,” he added.
Maynilad serves parts of Manila, Quezon City, and Makati, as well as Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, and Malabon. It also supplies water to Cavite City, Bacoor, and Imus, along with the towns of Kawit, Noveleta, and Rosario in Cavite province.
MPIC, which holds a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based 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.
