Maynilad trims IPO to P45.8 billion

Maynilad Water Services [MYNLD 20.00 pre-SEC] [link] has filed IPO paperwork with the SEC to conduct an IPO offering between July 3 and July 9 of this year, with a tentative listing date on July 17. The offer is priced at P20.00/share, but it will receive its “final” pricing on June 30. Under the terms of the preliminary prospectus, MYNLD has reduced the size of its IPO from P49 billion to P45.77 billion, split between a P33.7 billion primary firm offer, a P4.98 billion primary overallotment option, and a P7.09 billion secondary “upsize” option. Around P500 million of the primary IPO shares are considered “Reserve Shares”, and will be sold to First Pacific Company Limited, which owns a 40% interest in the company (Enterprise Investment Holdings) that holds a 60% interest in Metro Pacific Investments (MPI), which is the company that holds a ~58% voting interest in MYNLD. Assuming the full sale of the primary shares, 97% of the proceeds (P36.4 billion) will go toward “required capital expenditure”, with the remaining 3% (~P1.0 billion) going to “general corporate purposes”. According to the prospectus, MYNLD’s capex for FY25 is approximately P68.5 billion, so this transaction could help MYNLD fund up to 53% of this year’s expected capex spend.  

MB bottom-line: This is a compliance IPO, meaning that MYNLD is required by the terms of its franchise to publicly list at least 30% of its outstanding shares before January 2027. I’m not a huge fan of compliance IPOs because they’re usually not a very attractive growth opportunity, and they usually hit the market “heavy”, meaning that they struggle to achieve escape velocity from their listing price. I’m going to take a closer look at the prospectus to see if the potential dividend gives enough downside protection to make an IPO play worth a roll of the dice, but I’ll admit I’m starting this research from nothing. 

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