Metro Pacific Large IPO in Philippine. Metro Pacific Investment Corp, prepares to attract large funds from the Philippine stock market. The company, which is part owned by the Salim Group, will take off the stock of the Initial Public Offering (IPO). The IPO has a large target of funds to reach USD 1.6 Billion. This corporate action is awaiting approval from the regulator.
Manuel Pangilinan, Chairman of Metro Pacific said, the IPO fund will be used to pay the debt. Understandably, the company has a billion dollar loan to finance several toll road projects, power plants and light rail in the next three years. Metro Pacific has benefited from this investment, said Pangilinan.
Metro Pacific started to enter a domestic business in 2007 and invested about USD 100 Million in the sector. So, most of the IPO funds will be used for debt reduction. The Pangilinan whose business is supported by the billioner, Anthoni Salim has also made major investments in the Philippine, including in the telecommunications business of PLDT Inc and electric distributor Manila Electric Co.
In the history of building his business, Pangilinan briefly struggled with debt. He had lost a lot of money due to uncontrollable debts used for the development of ambitious property projects in Manila two decades ago. This time, Metro Pacific didn’t want to repeat the same mistake. So, before the debt grew and became a problem, the company wanted to start reducing the expense.
According to Bloomberg data, Metro Pacific and its subsidiaries have USD 4.73 Billion in debt. This debt occurred when Pangilinan began to collect the assets of toll roads, electricity, water and hospitals. Today, Metro Pacific must face a USD 1.3 Billion debt that will be due from this year until the upcoming 2023.
From the target of the USD 1.6 Billion IPO fund, Metro Pacific will earn about USD 970 Million from its 60% stake in Metro Pacific Hospital Holdings Inc. So that the shares ownership in the company remains 20%. Then, the hospital will get about USD 125 million to be used for expansion, while the Singapore sovereign wealth fund GIC Pte will get funding from the sale of half the share ownership of 40% in the corporate action.
Noel Reyes, head of investment of Security Bank Corp. Said, this IPO is quite interesting because it is the first and only hospital player in the Philippine, which has good business prospects. But the IPO price will likely be in the bottom range of the bid price. Metro Pacific will save 2 Billion Peso in the annual interest expense of debt repayment.
Metro Pacific has built the largest private hospital group in the Philippine. This business unit serves 3.8 million outpatient and 194,000 inpatient per year ago. The company has over 3,200 beds in 14 hospitals in late June, up from 1,095 beds in 2008. The company booked profit of 829 Million Peso and sales of 7.6 Billion Peso in the 1H19.
Metro Pacific Hospital will be worth about 29x EBITDA with the highest price of 182 Peso per share, based on the first half annual rate. Last, Pangilinan says she considers this business to be one of her biggest hits. Hospitals are the fastest growing businesses in the group.