Foreign funds take interest in SPNEC

MANILA, Philippines — Foreign fund managers are placing their bets on newly listed Solar Philippines Nueva Ecija Corp. (SPNEC), reflecting the growing interest among ESG (environmental, social and governance) investors in renewable energy.

SPNEC recently recorded P74.88 million in net foreign buying, according to data from the Philippine stock market.

Raymond Neil Franco, head of research at Abacus Securities Corp., said while foreign interest in the country is generally anemic, a lot of ESG investors are placing their bets on renewable energy.

“With regard to SPNEC, it is indeed intriguing given that foreign interest in the Philippines, overall, is still anemic. The company is also quite small and is a startup. However, investment in ESG is growing globally and one of the biggest segments of this market is renewable energy,” Franco said.

Many countries, he noted, have committed to achieve net zero emissions by 2050 or earlier.

“This will entail huge investments in solar, wind, and other clean energy projects. Even our own Department of Energy has set an aggressive target of 35 percent renewable energy by 2030, and Solar Philippines wants to take advantage of this,” Franco said.

Overall, this bodes well for SPNEC as foreign fund managers are long-term investors, he said.

“The good thing about foreign funds is that they hold long term, so they are probably unfazed by the fact that the Nueva Ecija solar farm won’t be completed until the third quarter or the fourth quarter of 2023,” Franco said, noting that some funds for example have held shares in Jollibee Foods Corp. for more than 15 years.

Grace Cerdenia, head of 2TradeAsia, said many investors welcomed SPNEC’s asset-for-share swap with Solar Philippines.

“What is uncertain is whether Solar Philippines has 10 GW capacity, which is extremely large for a solar asset,” she said.

SNPEC announced it would do an asset-per-share swap with Solar Philippines to set the stage for future expansion and growth.

Its board of directors approved an increase in the company’s authorized capital stock to 50 billion shares from 10 billion shares, subject to stockholder and regulatory approvals.

The increase in the authorized capital stock would prepare SPNEC for asset-for-share swaps with Solar Philippines and additional capital increases to expand its solar project portfolio.

SPNEC made its debut in the stock market last month, with its share price closing one percent higher from its IPO price of P1.

Solar Philippines aims to accelerate the adoption of solar energy in the Philippines.

It has developed a pipeline of over 10 GW of solar projects, according to the Department of Energy. These include an operational 63 MW in Batangas in partnership with Korea Electric Power Corp.; 340 MW operating and under construction in Tarlac, Batangas, and Cavite in partnership with Prime Infra of the Razon Group; and several projects on the rooftops of SM malls.

Another market observer from a foreign brokerage said interest in SPNEC reflects confidence on the future projects of the company.

“Take note that the company is the first pure solar listed company in the Philippine Stock Exchange. What is also interesting is the increase in its authorized capital stock which reflects the company’s goal to expand the business further,” the analyst said.