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Stock Commentary

Greenergy to buy 5 million shares of affiliate AgriNurture

Merkado Barkada
MB
It's a turbulent week at the PSE.
Merkado Barkada

Greenergy [GREEN 2.42 5.22%] disclosed that it had purchased 5 million shares of AgriNurture [ANI 5.98 1.36%] for P29.8 million (average price of P5.96/share).

The shares are “secondary”, meaning that they were not purchased from the company directly, and in this case the shares were actually purchased from sellers of ANI stock on the open market.

The 5 million shares represent 0.49% of ANI’s outstanding stock, and the purchases bring GREEN’s stake in ANI to 202,286,779 shares (19.75%). GREEN’s reason for the transaction was stated in the disclosure as follows: “The transaction will strengthen the position of the Company in the other ‘green’ projects.”

GREEN and ANI are both owned by Antonio Tiu, and while they are not formally related in a parent/subsidiary relationship, both share a common ownership group and are components of Tiu’s “#GREEN2030” vision.

MB BOTTOM-LINE

This transaction was not about getting ANI cashed-up in any way, since none of the money GREEN paid for the shares actually went to ANI. It’s part of a larger move by Antonio Tiu, through GREEN, to capture a larger stake of another Tiu-owned affiliate. Before this most recent purchase, GREEN bought 6,193,600 shares for P38,068,644 on July 22, and 10,000,000 shares for P61,300,000 back on June 30.

The question of whether or not this is the best use of GREEN’s money is probably one that is open to debate. Would the P130 million that GREEN just spent in the last month on ANI shares provide a better return on investment to GREEN shareholders if applied to any of GREEN’s own projects? Maybe Tiu could make the argument that, as owner of both, he understands better than anyone that ANI is undervalued and a great steal at current prices. Shareholders and investors could take a look at ANI’s chart, though, and reply that it looks like Tiu is using GREEN’s resources to prop up ANI’s stock price by providing artificial demand for ANI’s shares on the open market and acting like ANI’s stability agent. ANI has shed more than 30% of its value since December 2020, and in a fairly straight line, too.

Zoom out a bit, and you’ll see that ANI has been stuck in a fairly clear downward trend since October 2018; since then, ANI’s share price has dropped 67% from P18.30 to P5.96 as of yesterday. Now I need to be clear with you that I don’t know what is happening here. GREEN’s justification for the purchases is weak, but that doesn’t mean that there aren’t better actual reasons that GREEN simply neglected to tell us about. In that same vein, it’s entirely possible that what’s good for Antonio Tiu is also good for GREEN shareholders. We simply don’t know the true intended beneficiary of GREEN’s actions when it engages in related party transactions like this. That’s part of the challenge when you deal with groups of companies owned by the same group. 

 

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AGRINURTURE GREENERGY PHILIPPINE STOCK EXCHANGE
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