Small investors can buy up to P1M worth of Synergy shares

Local small investors (LSI) are allowed to subscribe to as much as P1 million worth of shares of power grid holding firm Synergy Grid & Development Phils. Inc., which launched yesterday its re-initial public offering (re-IPO) of up to P13.85 billion.

In an advisory, the Philippine Stock Exchange said the Securities and Exchange Commission (SEC) had approved an increase in the maximum subscription amount for LSIs who would participate in Synergy’s follow-on offering (FOO).

The cap for LSIs at public offerings is P100,000 per account, but the SEC grants exemption on a case-to-case basis. The cap was raised to P1 million for the P48.6-billion IPO of Monde Nissin Corp in May.

The LSI cap for the recently concluded AllDay Marts Inc.’s IPO was also raised to P300,000 per account.

Synergy, which trades on the PSE under the symbol “SGP,” is offering shares at P12 per share. The offering, which started on Oct. 26, will run until Nov. 2.

It will use the FOO proceeds to subscribe to nonvoting preferred shares that will be issued by National Grid Corporation of the Philippines (NGCP), the sole operator of the Philippines’ transmission network, linking power generators and distribution utilities to deliver electricity to end-users nationwide. Synergy is in turn NGCP’s indirect controlling shareholder.

“The SGP FOO was priced at a very attractive level. The FOO provides everyone with an avenue to invest in NGCP, the sole concession holder of the country’s power transmission backbone,” Synergy chair Henry Sy Jr. said in a statement.

Robert Coyiuto, Synergy vice chair, said the offering “is a unique opportunity to invest in NGCP and become a stakeholder in an asset of national importance.”

A market analyst estimated that at P12 per share, Synergy was valued at about five times its potential cash flow for 2022. This enterprise value as a ratio of earnings before interest, taxes, depreciation and amortization is seen to translate to a dividend yield of 7 percent for 2022, partly boosted by the fiscal incentives given to NGCP.

Under its franchise, NGCP is exempted from paying corporate income tax. INQ