Synergy seeks P 29-B ‘re-IPO’

Electricity superhighway holding firm Synergy Grid & Development Phils. has filed an application to sell as much as P28.85 billion worth of shares through a follow-on or re-initial public offering (re-IPO), bringing its public float back to a level sufficient to resume active trading at the local stock market.

Based on a prospectus dated Aug. 12 filed at the Securities and Exchange Commission, Synergy plans to sell up to 1.053 billion new common shares with an option to upsize by 101 million secondary shares at a price of at least P15 to as much as P25 per share.

Synergy intends to use proceeds from the primary offering to inject fresh capital into 60-percent subsidiary National Grid Corporation of the Philippines (NGCP), the sole and exclusive operator of the Philippines’ nationwide transmission network linking power generators and distribution utilities to deliver electricity to end-users across Luzon, Visayas and Mindanao.

The overallotment option will consist of 101 million secondary shares held by Synergy’s principal shareholders – business magnates Henry Sy, Jr. and Robert Coyiuto Jr.

After this equity deal, 20 percent of Synergy’s shares will be held by the public, which can increase to 21.92 percent assuming the full exercise of the over-allotment option.

At present, 49.93 percent of Synergy is owned by Sy while 49.81 percent is owned by Coyiuto, while only 0.26 percent is held by the public, way below the minimum public float of 10 percent.

Trading on its shares had been suspended since end-May following a share-swap deal that reduced Synergy’s public ownership. The deal in turn allowed Synergy to acquire a 67-percent stake each in Sy’s OneTaipan Holdings Inc. and Coyiuto’s Pacifica21 Holdings Inc., two key shareholders of NGCP.

By backdoor-listing on the local stock exchange through Synergy, the prospectus said NGCP was expected to be “one of the very few listed transmission companies in the world, providing investors a rare opportunity to tap into the value of this industry.”

NGCP is the sole concessionaire of the government’s transmission assets for 25 years and subject to certain conditions, with an extension option valid until 2059. As of end-June, NGCP operates 20,732 circuit kilometers of transmission line and 41,696 average megawatts of substation capacity. In addition, NGCP has a stable customer base of around 400 customers across distribution utilities, electric cooperatives, directly-connected industries and other entities.

Using proceeds from the re-IPO, Synergy intends to subscribe to non-voting preferred shares to be issued by NGCP.

NGCP projects about P160 billion of capital expenditure requirements for the 2021 to 2025 period, to support the load growth and meet the large generation capacity additions while maintaining system reliability and power quality. Of the total amount, NGCP’s total capital expenditures budget in 2022 approved by the Energy Regulatory Commission amounts to P37.6 billion.

Synergy has appointed Standard Chartered Bank, Philippine Commercial Capital Inc. and BDO Capital & Investment Corp. as joint financial advisors.

Merrill Lynch (Singapore) Pte. Ltd., J.P. Morgan Securities plc and UBS AG Singapore were mandated as the joint global coordinators and joint bookrunners.

BDO Capital act as the sole domestic coordinator and joint domestic lead underwriter and bookrunners, together with BPI Capital and PNB Capital and Investment Corp.