West Zone concessionaire Maynilad Water Services Inc., a partnership between Metro Pacific Investments Corporation (MPIC), DMCI Holdings and Marubeni Corporation, is already talking to several banks in preparation for its planned $1 billion initial public offering (IPO).
In an interview at the sidelines of Management Association of the Philippines general membership meeting, MPIC Chairman and President Manuel V. Pangilinan said Maynilad is “busy talking to the banks because (they are required to list by 2027). So we’ll try to put it away this year or, at the latest, next year.”
While still ironing out some kinks, Maynilad is committed to launching its IPO, estimated at $1 billion, within 2025 and will be filing its application with regulators by the first quarter.
“Yes, we are poised to list next year. Our target is to be prepared for two possible dates: before the elections—April or after the elections—July,” Maynilad President and CEO Ramoncito Fernandez said in an earlier interview.
He added that “our plan is to be push-button ready so we are now pushing our team to apply already by the first quarter of next year.” Maynilad is the concessionaire for the West Zone of Metro Manila."
While they have yet to fix the size and value of the IPO, Fernandez pointed out that their commitment is evident because, “the fact of the matter is that we have already appointed three financial advisors. HSBC, Morgan Stanley and UBS,” he added.
Given its size, the bulk of the IPO shares will be offered to overseas investors and, while its franchise requires a 20 percent public ownership, he said Maynilad will be “happy if it will be bigger.”
However, Fernandez said there is also some “sensitivity” among its existing shareholders, particularly Japanese partner Marubeni Corporation, regarding the dilution of their stake due to the IPO. Also in the partnership is MPIC and DMCI.
“Marubeni wants to stay. In fact, they are very sensitive in being diluted. They are the most sensitive actually in being diluted. We have not agreed yet on whether it will be equal dilution for all three shareholders but, ideally, it should be equal. But (Marubeni) don't want to dilute their board membership. That is what they are most critical about. Of course, they want to consolidate their financials,” he noted.
In the meantime, Maynilad is planning to fund its P40 billion capital expenditures this year through a combination of debt instruments, bank loans, and internally generated funds.
Fernandez said these options are all available to the company if its initial public offering does not push through or if it is conducted much later in 2025.
While the firm is ready to launch its IPO as early as this year, Fernandez said it will really depend on whether market conditions are favorable and on the valuation.
He said that, since their programmed capital expenditures next year will amount to P25 billion to P40 billion, they will need to raise funding of about P25 billion to P35 billion.
“We will have to study the most efficient way to raise funds next year because we still have borrowing capacity from the bilateral… We will have to go for the more efficient (or cheaper way to raise funds,” he said.