Philippines grid operator preparing for potential record IPO

[MANILA] The Philippines' electricity grid operator is preparing for an initial public offering (IPO) to comply with regulatory requirements, a share sale that a source with knowledge of the plan said could raise as much as a billion dollars.

The National Grid Corp of the Philippines (NGCP), 40 per cent owned by China State Grid Corp, was required by a 2008 law covering its franchise terms to sell at least 20 per cent of its shares to the public within 10 years.

NGCP spokesperson Cynthia Alabanza in a text message on Wednesday confirmed the company was preparing for an "eventual" IPO, but gave no timeframe.

But a source with direct knowledge of the plan on Thursday said that NGCP has a February deadline to complete the IPO and will be appointing banks in the coming days to facilitate the deal.

Though that could take months, selecting banks is something tangible that NGCP can do to show it is advancing the IPO process, said the source, who declined to be identified as he was not authorised to speak to media.

Arranger banks would prioritise selling large chunks of shares to cornerstone investors, the source said, adding that NGCP could trade with a market value of US$6 billion to US$8 billion. Banks were invited in December to pitch for the IPO mandate, the source said.

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That valuation would make the sale the Philippines' largest IPO yet. In October, fibre broadband provider Converge ICT completed a US$600 million IPO, the second largest after the 2013 US$627 million offer by Robinsons Retail Holdings.

"We were previously advised that market conditions may not be ideal at the moment, but we continue to take steps to prepare for an eventual IPO," Ms Alabanza said.

Two Manila-based bankers said a listing this year was unlikely amid turbulent market conditions.

The Philippines has been a regional laggard at getting firms to go public, with just seven IPOs since 2017.

REUTERS