MPIC raising funds in US

Infrastructure holding firm Metro Pacific Investments Corp. (MPIC) plans to tap fresh funds from the US market through a maiden offering of American depositary receipts (ADRs).

In a disclosure to the Philippine Stock Exchange, the holding firm led by businessman Manuel V. Pangilinan said it was scheduled to launch Monday its first tranche of ADR offering through appointed depository Deutsche Bank.

MPIC president and CEO Jose Ma. K. Lim said the program was “in line with the company’s thrust to broaden its investor base by making its stock available to the widest possible audience.”

ADRs refer to negotiable certificates issued by a bank in the United States that serve as a proxy to a specified number of shares in a foreign company that is traded on the stock exchange. These are denominated in dollars, with the underlying security held by an American financial institution overseas.

Such an instrument is deemed a good option to acquire an interest in a foreign company while collecting dividends and capital gains in dollar denomination. ADRs are usually listed on the New York Stock Exchange, Nasdaq or traded over the counter.

“I think they need to make a reverse stock split to make the stock more appealing to US investors,” said Jose Mari Lacson, an analyst at Campos Lanuza & Co. A reverse stock split means the number of shares is reduced such that the price and earnings per share will rise but the market capitalization remains the same.

If that’s the case, Lacson said the share price of MPIC would increase because of the reduction in the number of shares. “It makes the share price more expensive depending on the impact on odd lots,” he said, adding he was assuming that MPIC would like to follow the model of telecom giant Philippine Long Distance Telephone Co., which also has depositary receipts traded in the United States.

Both PLDT and MPIC are controlled by the Pangilinan-led First Pacific Co. Ltd. of Hong Kong.

Shares of MPIC fell 1.19 percent to P4.15 but Lacson said this was in line with the market’s overall decline and likely not due to the announcement of the ADR offering. Based on Monday’s closing, MPIC had a market capitalization of P103.31 billion.