MPIC-SMC JV seen as opportunity for foreign, local investors

By Ashley Erika O. Jose, Reporter

THE PLANNED joint venture (JV) between Metro Pacific Investment Corp. (MPIC) and San Miguel Corp. (SMC) presents an appealing opportunity for both foreign and local investors seeking exposure to emerging markets, according to analysts.

“Although nothing is final yet, there is every indication their massive tollways joint venture is primed to become one of the country’s biggest IPOs (initial public offering),” Juan Paolo E. Colet, China Bank Capital Corp. managing director, said in a Viber message on Tuesday.

“This IPO will bring a lot of interest from foreign and local investors given the size, quality, and profitability of the combined Metro Pacific and San Miguel tollways portfolio,” he added.

SMC through SMC Infrastructure is in discussion with MPIC on a possible joint venture for a toll road business, SMC told the stock exchange on Tuesday.

MPIC has said that the planned joint venture with SMC will be a “significant company” and may be listed on the stock exchange within the year.

“Best time to list this year given return of foreign participation in the market and increased market liquidity in second half boosting value turnover,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.

The domestic IPO market is still challenging for now but conditions for large equity offering may improved by the second semester, Mr. Colet said.

Globalinks Securities and Stocks, Inc.’s Head of Sales Trading Toby Allan C. Arce said the timing of the IPO is deemed crucial, factoring in the volatilities of the current market condition.

The Philippine economy expanded by 5.6% in 2023, falling short of the government’s 6-7% target and slower than 7.6% in 2022.

In January, inflation cooled to 2.8% from 3.9% in December and 8.7% a year ago.

“The overall market conditions, including interest rates, inflation, and geopolitical factors, will also impact the success of the IPO. If market conditions are favorable and investor confidence is high, it could be an opportune time to list,” Mr. Arce said.

However, due to the stability of the tollways industry, listing within the year is somehow a reasonable time frame, he added.

“Mergers often create synergies and economies of scale, which can enhance the competitiveness and profitability of the combined entity.”

“Given the essential nature of tollways infrastructure and the potential for steady cash flows, there may indeed be significant investor appetite for this listing plan,” Mr. Arce also said.

For China Bank Securities Corp. Research Associate Lance U. Soledad, the announcement of the planned joint venture and listing signifies improved confidence in the market.

“Assuming this listing pushes through, we think it would provide a positive signal to other companies looking to list or those that deferred their listing that the market now has the appetite for IPOs — especially given prospects of a hefty offer size of this tollway listing,” China Bank Securities Corp. Research Associate Lance U. Soledad said in an e-mail. 

The Philippine Stock Exchange, Inc. has said that it expects at least six IPOs, which are anticipated to raise about P175 billion in 2024.

MPIC is one of the three key Philippine units of Hong-Kong based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority share in BusinessWorld through the Philippine Star Group, which it controls.