Merkado Barkada
October 23, 2024 | 11:27am
Meralco [MER 493.00 ?0.9%; 108% avgVol] [link] confirmed a report by BusinessWorld on a possible IPO listing for its renewable energy subsidiary, MGen Renewable Energy (MGreen), which itself is a subsidiary of MERALCO PowerGen Corp (MGen). In the report, MGen’s President, Emmanuel Rubio, said that the market is “enticing for investments”, adding, “There is nothing holding us back from considering listing [MGreen]. The matter is when and if we really need to. We are evaluating our options.” Mr. Rubio said that an IPO, if it did happen, “could” happen in the next five years. MER clarified that Mr. Rubio’s statements on it were accurate, but that the plans are “preliminary in nature” and have not been “presented to the Board of MGen for consideration.” MGen is the legal entity that acquired SP New Energy [SPNEC 1.22 unch; 47% avgVol].
MB BOTTOM-LINE: I applaud the journalist’s work in getting Mr. Rubio to speak more openly about MGen and MGreen, but almost every company on the PSE has a vague plan for how it could raise money through listing subsidiaries. Spinning-off subsidiaries are to CFOs as war games are to Generals. Just like every country has a battle plan for every contingency, every CFO has at least a one-page document somewhere (probably with an associated Excel spreadsheet that hasn’t been updated since the pandemic) outlining how the parent company could raise money through a subsidiary’s listing, and under what conditions this might be most advantageous. MER’s boss, Manny Pangilinan, has a complicated history with the PSE. He has been quick to use the threat of listing to help in his negotiations with other parties, so I guess I’ll believe it when I see it.
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