Megawide plans real estate unit's IPO in 2025

Megawide Construction Corporation expects its real estate subsidiary PH1 World Developers to be ripe for an initial public offering (IPO) in two to three years or around 2025 when its business has grown to about twice its current size.

In an interview, Megawide Chairman and CEO Edgar Saavedra said the subsidiary’s EBITDA (earnings before interest, taxes, depreciaton and amortization) is expected to reach about P5 billion by then, higher than the average of P2 billion to P3 billion annual EBITDA of the parent company.

Megawide Chairman and CEO Edgar Saavedra

He noted that while Megawide generates strong revenues from its construction business, margins are relatively lower compared to the residential development business.

Saavedra said PH1 World is currently developing five projects and targets to launch two more high-rise or medium-rise projects every year.

“By 2026, we should have about 8 to 10 projects with an order book of maybe 10 years. The inventory of units to sell will be worth P200 billion in 10 years,” he added.

Because this will entail a large amount of capital to sustain, Saavedra said proceeds from the planned IPO will support PH1 World’s continued expansion in Metro Manila as well as in the provinces.

Saavedra said that, “our business model today is normally we do JV (joint venture with land owners) so it wont be too heavy on capital. But when we do our IPO (initial public offering), it will change because fundraising is easier.”

In 2023, PH1 World launched two projects worth P3.5 billion for its first foray into the horizontal residential space.

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PH1 World Developers President Gigi G. Alcantara

PH1 World Developers President Gigi G. Alcantara said they have decided to go into the horizontal market to help in reducing the huge backlog for housing development.

While the firm has already launched P19.5 billion worth of high- and mid-rise residential developments in the past years, it is only in 2023 that PH1 World Developers had launched its first horizontal project.

Being developed through the firm’s horizontal subsidiary Landscapes is the P1.7 billion Northscapes in San Jose Del Monte, Bulacan which will have a mix of single-attached and townhouse units.

Landscapes General Manager Eric Gregor Tan said the project will have a total of 343 units built on a five-hectare property. 

Its units will consist of the single-attached Elia, the townhouse end-unit Salana, and the middle unit townhouse called Alba. All unit types will be two storeys high with three bedrooms each.

The firm has also launched a second similar project in Trece Martires, Cavite which will have about 330 units worth P1.8 billion. It will be also on a five-hectare lot but expandable to 30 hectares.

Both the Bulacan and Cavite projects will have a development cost of about P600 million each.

Meanwhile, Tan said they are currently negotiating with landowners for other properties in Luzon and Cebu to add to PH1 World Developers’ horizontal project pipeline.

These include the expansion area for the Trece Martires project as well as in Calumpit and Bulacan; General Trias, Cavite; Lipa, Batangas; and San Jose, Batangas.

“We are looking at a total of 200 hectares for our pipeline,” said Tan adding that, aside from Luzon, they are also looking at the Visayas, particularly in Cebu.