By Ashley Erika O. Jose, Reporter
THE Metro Pacific Tollways Corp. (MPTC) will defer its initial public offering (IPO) to 2025, its president said, citing the company’s stance to weigh its options amid a plan to form a joint venture company with San Miguel Corp. (SMC).
“As far as MPTC is concerned, we are ready to do an IPO after the delisting of MPIC (Metro Pacific Investments Corp.). We’re going to be the first [in the group to list after the delisting],” Rogelio L. Singson, president and chief executive officer of MPTC, told reporters on the sidelines of the Transport Con 2023 conference on Wednesday.
However, because of the planned SMC joint venture, he said: “There will be delays.”
Earlier this year, MPIC said it was planning to list its tollways unit MPTC on the stock market after the parent firm’s delisting from the Philippine Stock Exchange (PSE) in October.
AB Capital Securities, Inc. Vice-President Jovis L. Vistan said IPOs right now are still not attractive given the challenging economic environment.
“Market appetite for equities is weak. So the timing won’t look right,” he said in a Viber message to BusinessWorld on Thursday.
In August, MPTC signed a memorandum of agreement with SMC to build and operate the Cavite-Batangas Expressway and the Nasugbu-Bauan Expressway.
In November, Manuel V. Pangilinan, chairman of MPTC, said the company was planning to form a joint venture company with SMC to build expressways, which he said will be a significant firm and may be a candidate to list at the PSE.
“That’s what we don’t know yet, we hoped. That would be bigger,” Mr. Singson said, referring to whether the planned joint venture company between the two entities would also go public.
With the planned joint venture, going public is still early to determine, Mr. Singson said, adding that for now MPTC’s plan to do an IPO was postponed.
“The IPO will be delayed because we have to find out whether we’re going to do it together, a merger, or MPTC will do an IPO first,” he said.
For stock market analysts, a joint venture company being listed on the PSE is more appealing to investors, rather than listing the Panglinan-led tollways unit alone.
“A combination of their tollways businesses would create an undisputed infrastructure giant in the country. A company of that scale would make it more attractive to institutional investors and especially foreign funds looking for a sizable infrastructure play,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
A market listing for the planned joint venture is also feasible, given both companies have a clear growth strategy that is deemed attractive to investors, Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said.
“Investors would likely view the joint venture between MPIC and SMC positively. The two companies are both well-established and respected conglomerates with a strong track record of success in the infrastructure sector,” Mr. Arce said in a Viber message.
However, the current economic environment in the Philippines could also pose some challenges for an IPO, as inflation and interest rates remain soaring.
The headline inflation rate slowed to 4.9% in October from 6.1% in September and 7.7% in October 2022. Still, the October print marked the 19th straight month that inflation breached the central bank’s 2-4% target band.
“This is a challenging time to do an IPO. Risk sentiment remains tentative given high interest rates and lack of certainty as to when monetary policy will start loosening,” Mr. Colet said.
The Bangko Sentral ng Pilipinas kept its key interest rate at a 16-year high of 6.5% on Nov. 16. The Monetary Board raised borrowing costs by 450 basis points from May 2022 to October 2023 to tame inflation.
“Despite these challenges, there are also some factors that could mitigate the negative impact of the current economic environment on the joint venture’s IPO plans,” Mr. Arce added, citing both companies’ “strong” track rec-ord in the infrastructure sector to drive market sentiment.
“The joint venture has a clear growth strategy that focuses on developing and operating major expressway projects in the Philippines. This could attract investors who are looking for long-term growth opportunities,” he added.
Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.
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