Maynilad to proceed with IPO in July but downsizes offer to P45.8B
The decision of concessionaire Maynilad Water Services Inc. to cut the size of its much-awaited initial public offering (IPO) may have resulted from weaker-than-expected demand as the local stock market struggles with volatility.
Based on its May 14 preliminary prospectus, Maynilad has opted to trim its IPO by 6.5 percent to P45.8 billion. The water utility firm initially wanted to raise P49 billion from its stock market debut by offering up to 2.46 billion common shares at a maximum price of P20 each.
This time, however, Maynilad will only offer up to 2.3 billion common shares.
While the company has yet to specify the reason behind the smaller size, analysts said this may have something to do with investor demand.
“The company just wrapped up its roadshow to test the demand and perhaps the demand was not big enough to support the previous size,” Alfred Benjamin Garcia, research head at AP Securities Inc., told the Inquirer in a text message. “It’s not surprising, considering the volatile market lately.”
Pricing on June 30
Maynilad will announce the final price of its IPO on June 30, with the offer period scheduled from July 3 to July 9. It will list on the main board of the Philippine Stock Exchange (PSE) on July 17 under the ticker “MYNLD.”
Unicapital Securities Inc. equity research analyst Peter Garnace also pointed out that global trade tensions may have generally tempered investor appetite, “thus reducing the IPO size to ensure full subscription.”
“Also, the reduction in primary issuance could be a strategic move by Maynilad to lessen dilution among existing investors,” Garnace added.
Maynilad is jointly owned by Metro Pacific Investments Corp. of tycoon Manuel V. Pangilinan, DMCI Holdings Inc. of the Consunji family and Japanese conglomerate Marubeni Corp.
Maynilad president Ramoncito Fernandez earlier explained that they would need to discuss equal dilution with other stockholders. This is meant to ensure that the ownership stake of all shareholders decreases by an equal percentage after additional shares are offered to the public.
‘Small haircut’
Still, Garcia noted that the IPO size reduction was “just a small haircut,” implying that demand was still high for a defensive stock like Maynilad, whose performance is typically unaffected by economic conditions due to the nature of its business.
“At least this size reduction is not as big as what we’ve seen in recent times,” he said.
To recall, Top Line Business Development Corp., which was the first to brave the stock market this year, slashed its IPO size by 77 percent to P732.62 million.
It cited the need to refocus its expansion plans, although analysts have pointed out that the market did not have enough risk appetite for its initial high valuation.
So far, the Cebu-based fuel retailer is the only company to list on the local bourse.
The PSE raised P42.42 billion in capital during the first quarter, representing 51 percent of the P82.4 billion raised during the entire 2024.
PSE president and CEO Ramon Monzon said they were expecting the local equities market to raise an additional P122.81 billion from the IPO of Maynilad as well as stock rights and follow-on offers of other companies later this year.
