Citicore REIT cuts IPO size, final price

MANILA, Philippines — Citicore Energy REIT Corp. (CREIT), the country’s first energy real estate investment trust (REIT), has slashed the offer size and price for its maiden share sale to provide investors with better yields in the long run.

In a notice to the Philippine Stock Exchange yesterday, CREIT president and CEO Oliver Tan said it set the final price of its initial public offering (IPO) to P2.55 per share, to raise up to P6.4 billion. The final price represents a 19 percent decrease from the proposed maximum offer price of P3.15 apiece.

“CREIT has decided to price the first energy REIT in the country at P2.55 per share with implied dividend yield seven percent of projected 2022 earnings to provide more upside to the public investors who will be its long-term partners in the journey to net zero carbon future,” the company said in a statement.

The company reduced its offer size to 2.509 billion shares, consisting of 1.047 billion primary shares and 1.13 billion secondary shares to be offered by Citicore Renewable Energy Corp. (CREC).

Initially, it was looking at selling up to 2.789 billion shares consisting of 1.047 billion primary shares and 1.74 billion secondary shares.

CREIT also slashed the over-allotment option from 418.34 million shares to 327.27 million shares.

“At this price level, the sponsor (CREC) has decided to increase its stake in the company post-IPO from 57.4 percent to 66 percent, assuming without the over-allotment portion of the offering…as the sponsor believes in the long-term value creation of the company,” it said.

If the overallotment option is fully exercised, CREIT is expected to raise P6.4 billion from its maiden share sale.

Sought for comment, Regina Capital Development Corp. Business Development head Luis Limlingan said reducing the offer size and price would provide better yields to investors.

Their projections showed a seven percent annualized dividend yield for 2022 and 7.4 percent for 2023.

“Following the planned acquisition of the Bulacan property and the South Cotabato property, estimated dividend declaration for this year and next would be P0.18 per share and P0.19 per share, respectively. The projected yield thus becomes more attractive,” Limlingan said.

Net proceeds from the maiden share sale will be used to acquire properties within the Citicore Group, particularly to fund its intended acquisition of the properties owned by Citicore Solar Bulacan Inc. and nv vogt Philippines Solar Energy One Inc. (SE1 or Citicore South Cotabato).

Citicore Bulacan and Citicore South Cotabato operate solar power plants on such properties and are wholly owned indirect subsidiaries of CREC.

The offer period will run from Feb.  2 to 8, with a target listing date of Feb.  17.

The Citicore Group pioneered the Agro-Solar Social concept, which runs in most of the group’s plants that promote the shared goals of clean power generation, agricultural production, and socio-economic development.

Unicapital Inc., the issue manager, and BDO Capital & Investment Corp. are the joint global coordinators. PNB Capital and Investment Corp. and Investment & Capital Corp. of the Philippines are the local underwriters while CIMB Investment Bank Bhd and CLSA Ltd. are the international bookrunners.

CREIT expects to offer a stable dividend payout in accordance with the REIT Law. The company also believes it offers a unique value differentiation, with a green asset portfolio anchored on investing in and for the future.

The Citicore Group has a pipeline of 1,500 megawatts-direct current (MWdc) solar plant capacity in the next five years with 120.5-MWdc underway. To date, Citicore is generating an installed capacity of 163 MW.