Razon upsizes power and water IPO to P33B ahead of planned Q3 listing

Enrique Razon Jr.

Ports and gaming tycoon Enrique Razon Jr. remains keen on listing his water and renewable power assets by the third quarter of the year via an upsized P33.2-billion initial public offering (IPO).

Razon’s Prime Infrastructure Capital Inc. owns various power and infrastructure assets, including a controlling stake in concessionaire Manila Water Co. and nearly half of the Malampaya gas project, which supplies a fifth of the Philippines’ power requirements.

It could be the second-largest IPO this year after the planned P55-billion listing of the Sy family’s SM Prime Holdings’ real estate investment trust in the second half of 2023.

Eduardo Francisco, president of BDO Capital & Investment Corp., said they were still pushing for a third quarter listing but noted this was subject to possible changes given the uncertain market outlook.

“No definite timetable as the market is still weak,” Francisco said in a text message.

Prime Infrastructure, which already delayed its 2022 listing, filed its latest draft preliminary IPO prospectus on March 24.

The company is planning to sell as many as 1.97 billion shares—1.79 billion shares, plus an overallotment option of 179.5 million shares—at P16.80 each to raise over P33 billion.

Last year, Prime Infrastructure was targeting to raise P28 billion via the sale of shares at P14.60 apiece.

The company said all of the shares, including those under the overallotment option for post-IPO price stabilization, were primary shares, meaning these would be used for its expansion and other expenses.

Based on the prospectus, Prime Infrastructure will sell as much as 22 percent to outside investors. It will have a post-listing market value of P150.2 billion at the prospective offer price.

Bulk of the proceeds, or P17 billion, will be spent on the Terra Solar power plant, a venture with businessman Leandro Leviste.

The first phase, with an output of 600 Megawatts (MW), will be operational by 2026 while the second 250-MW phase will start operations the following year.

The IPO proceeds only cover a portion of the Terra Solar project, which requires another P192 billion in spending, the prospects showed.

Prime Infrastructure is also allocating P5.4 billion for the 667-MW Wawa hydropower plant; P2.2 billion for the 1,400 MW Ahunan, Laguna hydropower plant; P3 billion for the Upper Wawa Dam; P3.5 billion for land acquisition for Prime Integrated Waste Solutions; and P1 billion for general spending.

Prime Infrastructure’s net income in 2022 fell 49 percent to P5.5 billion while revenues jumped 90 percent to P28.9 billion. More than 78 percent of revenues came from water and related revenues.

Prime Infrastructure said it was in the midst of a business restructuring that will allow it to focus on water, sustainable energy, and waste management and sustainable fuels sectors. This will be completed by the second half of 2023, the prospectus showed.

CLSA Ltd. and UBS were hired as joint global coordinators and bookrunners.

BDO Capital and BPI Capital are the joint bookrunners and local underwriters while domestic co-lead underwriters are First Metro Investment, PNB Capital and RCBC Capital. INQ