Metro Pacific pockets $150 million from sale of new shares

The deal attracts good interest from existing shareholders and domestic investors and is upsized by 50%.
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Manny Pangilinan, chairman of Metro Pacific
<div style="text-align: left;"> Manny Pangilinan, chairman of Metro Pacific </div>

Metro Pacific Investment Corp, the Philippine infrastructure investment company, last night raised Ps6.12 billion (about $150 million) from a top-up placement following a solid run in its share price since the beginning of the year.

The company has had a good following among investors since 2006 when it started to transform itself from an uninspiring property holding company to become the country’s only pure infrastructure play with interests ranging from water and electricity to toll roads and hospitals.

Like its previous capital-raising exercises, last night’s placement had good support from existing shareholders and domestic investors, but also attracted new international accounts, a source said. In all, about 70 investors participated in the transaction, allowing it to be upsized from a base deal of $100 million.

Metro Pacific was focusing on the absolute deal size, rather than on selling a specific number of shares and, as a result, the term sheet outlined the offering as a base deal of $100 million plus an upsize option of $50 million.

Based on the final price, it ended up selling 1.33 billion shares or 5.4% of the existing share capital.

The shares were offered at a price between Ps4.60 and Ps4.75, which translated into a discount of 3.3% to 6.3% versus yesterday’s close of Ps4.91.

The source said that the demand would have allowed the price to be fixed above Ps4.60, but in light of the 50% increase of the deal size, the company and the two bookrunners decided to price at the bottom for the maximum 6.3% discount. As the order book had been kept open until 10:30pm Hong Kong time for a couple of large investors on the US west coast that had been wall-crossed before the deal launched, it was also getting quite late and a decision to price higher may have required going back to some investors to see whether they wished to raise their limits.

Whatever the reason for holding back, taking into account the 10.3% gain in the share price this year, a 6.3% discount doesn’t seem too generous, particularly when considering that the deal accounted for close to 50 days of trading volume.

The share price fell from an intraday high of Ps5.03 yesterday and ended the session 2.6% lower, which meant that the discount to the one-day volume-weighted average price (VWAP) was a bit wider at 7.3%. The VWAP worked out at Ps4.96.

According to the source, the largest orders came from long-only international investors and domestic accounts, but there was also some interest from hedge funds.

Metro Pacific, which is controlled by Hong Kong-listed investment holding company First Pacific, said it will use the proceeds from the top-up placement for further road and water developments, but didn’t mention any specific projects. It is well-known that the government is looking to privatise a number of projects and assets across the infrastructure sector, however, and Metro Pacific has been accumulating a sizeable portfolio of assets in the past six years.

On Friday last week, Philippine President Benigno Aquino III approved five major infrastructure projects worth around Ps146 billion for implementation this year. The list includes a road project connecting the North Luzon Expressway with the South Luzon Expressway, as well as the Cavite-Laguna Expressway, the secretary of the Presidential Communications Development and Strategic Planning Office told the local media.

The company is currently bidding for the right to operate the expanded facilities at the Mactan Cebu International Airport and confirmed on Thursday last week that it is in talks with a potential foreign partner to help with the operations, should it be selected the winner.

This was the second equity deal out of the Philippines this year after conglomerate GT Capital and its controlling shareholders raised $350 million from a combined sale of primary and secondary shares on January 9.

The Metro Pacific placement was arranged by CLSA and UBS.

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