Govt to earn up to P8.35B from
PNOC-EDC initial public offer

By Honey Madrilejos-Reyes
Reporter

THE government is set to earn at least P6.78 billion to P8.35 billion from the initial public offering (IPO) of the geothermal arm of the Philippine National Oil Co. (PNOC).
           
The PNOC-Energy Development Corp. (PNOC-EDC) has set a price of P3.20 for each share of stock that it would sell to both domestic and foreign investors as part of its IPO this month.
           
PNOC-EDC will offer 4.2 to 5.2 billion shares to the public. At P3.20 per share, the company could generate proceeds of between P13.4 to P16.6 billion from the IPO.
           
Fifty percent of the total shares to be offered by PNOC-EDC would represent new or primary offering. The other half accounts for secondary shares or those to be sold by parent company PNOC. Target listing date is on December 12.
           
The PNOC would earn P6.78 billion if it sold 2.118 billion PNOC-EDC shares, or P8.35 billion if it sold 2.609 billion shares.
           
The IPO proceeds would most likely fund the P2.98-billion budget set by the company for 2007. Bulk of the capital expenditure would go to the North Luzon Wind Power Project Phase 1.
           
PNOC-EDC has tapped BDO Capital and Investment Corp., Development Bank of the Philippines, ING Bank and Land Bank of the Philippines as issue managers and domestic lead underwriters. CLSA Ltd., on the other hand, is the sole bookrunner and international underwriter.
           
These underwriters anticipate small investors to join the PNOC-EDC offering following the successful IPO of fish canner and exporter Alliance Tuna International Inc., in early November.
           
During the first week of its listing in the stock market, the stock price of Alliance Tuna more than doubled to P2.95 from its offering price of P1.35 per share. It now hovers at P2.20 per share.
           
The favorable performance of Alliance Tuna’s stock coincided with the overall advance of the local market. Stock prices, as tracked by the PSEi, have advanced by over 30 percent since the end of 2005 due to a confluence of favorable developments. These include an improvement in government’s fiscal position, a drop in interest rates and the improved performance of listed companies.
           
“If the small investors missed the Alliance Tuna action and now want to join the PNOC-EDC offering, we will be ready to help, because the PSE, along with PNOC-EDC and its underwriters, have put in place a system to entertain requests for IPO allocations from small investors,” said stock exchange president Francis Lim. 
           
The main offices and provincial branches of all banks affiliated with the domestic lead underwriters have been alerted to accommodate requests for allocations from small investors, once the offering starts today until December 8.
           
Small investors can each get a minimum allocation of 2,000 PNOC-EDC shares from the underwriters. If they want more and there are still available shares for small investors, they can subscribe in multiples of 1,000 shares, provided the allocation of each one will not exceed P25,000, which is the maximum allocation a small investor can get.
           
“Small investors should not be shy, if they want to join the IPO, because the 10-percent allocation for them is mandated by law,” said Lim.

(With E. Sd Perez)