Maynilad Water Services Inc. may have to woo more cornerstone investors for its ₱45.8-billion initial public offering (IPO) as the prospective $245 million from the World Bank Group’s (WBG) International Finance Corp. (IFC) and the Manila-based Asian Development Bank (ADB) is a strong vote of confidence but may not be enough to prop up the share price.

Based on Maynilad’s updated prospectus, IFC has agreed to participate as a cornerstone investor in the offer for an investment size of up to $100 million, also at a subscription price of up to ₱15 per share. Maynilad has set its maximum indicative price at ₱20 a share.

On the other hand, the ADB is currently contemplating participating as a cornerstone investor in the IPO for a potential investment size of up to $145 million, at a subscription price of up to ₱15 per share.

While the ADB has substantially completed its evaluation for its participation in the offer, it is still in the process of obtaining the approval of its board of directors.

“There is no assurance that such approval will be obtained for the ADB to sign legally binding documentation for this transaction and participate as a cornerstone investor. Thus, there is no guarantee that the ADB would be able to participate in the offer,” said Maynilad.

According to Abacus Securities Corp., at the current exchange rate, these two institutions will own around ₱14.2 billion worth of stock, or over 40 percent of the offer, if it is priced at ₱15.

However, it noted that, “Domestic financial institutions will still have to pick up some of the slack to reduce the overhang on listing day.”

Reyes Tacandong & Co. senior adviser Jonathan Ravelas said that IFC and the ADB’s backing of Maynilad’s IPO at ₱15 per share “is a strong vote of confidence. It signals they see long-term value in water infrastructure and trust the governance.”

“The IFC/ADB cornerstone investment is good news, but domestic institutions will need to heavy lifting themselves for Maynilad to get a pop on its first day,” Abacus added.

While it believes there will be demand from local funds, “the question is whether or not such will be robust enough to give Maynilad a chance to rise once trading in the stock commences.”

Assuming domestic institutions take up 10 percent of the offer, and another 10 percent goes to the local small investors’ portion, each of the Philippine Stock Exchange’s (PSE) 120 or so active brokers will have an allocation of ₱65 million to ₱70 million, assuming an IPO price of ₱15.

“On the other hand, if 20 percent is taken up by local funds, the allocation per broker drops to less than ₱45 million, which sounds more doable,” Abacus said.

Maynilad is offering a total of 2.29 billion shares for up to ₱20 per share, consisting of a primary offer of 1.66 billion new common shares, a preferential offer to First Pacific Co. of 24.9 million new shares, an upsize option of 354.7 million secondary shares of shares owned by existing shareholders, and an overallotment option of up to 249.05 million shares.