Transmission operator National Grid Corp. of the Philippines is taking steps to comply with an initial public offering requirement, an executive said Thursday.
NGCP spokesman Cynthia Perez-Alabanza said the company started preparations as early as 2014 “with compliance to our franchise foremost on our minds.”
Bloomberg reported that NGCP was talking to banks for the planned IPO that would raise about $1 billion.
“We were previously advised that market conditions may not be ideal at the moment, but we continue to take steps to prepare for an eventual IPO,” Alabanza said.
Republic Act 9511, which granted the franchise to NGCP to operate the country’s transmission network, requires NGCP to list at least 20 percent of its shares at the Philippine Stock Exchange within 10 years after it started operations.
NGCP commenced operations on Jan. 15, 2009 and is required to make a public offering of its shares representing 20 percent of its outstanding capital stock on or before Jan. 14, 2019.
NGCP previously asked for deferment of the IPO in a filing with the Energy Regulatory Commission as it cited unfavorable market conditions.
The ERC, in a decision dated March 2020, directed NGCP to list its shares within six months after the order. The ERC then denied the application of NGCP to extend the period to list its shares of stock in compliance with RA 9511.
It said the law’s intention is to disperse ownership of the corporation to allow public investors to ensure that it will not be subject to monopoly. NGCP filed a motion for reconsideration on the ERC decision in August 2020. NGCP said it conducts its business in full compliance with all applicable laws, rules and regulations.
“We are not avoiding an IPO, but merely asked for a deferment of the offering to a more favorable time given the prevailing circumstances at the time of the petition. We fully respect the decision and jurisdiction of the ERC over the matter, and we intend to reply appropriately,” Perez-Alabanza said earlier.
NGCP said it could not undertake the IPO when the National Transmission Corp. made public threats against its concession and that conducting an IPO in the scenario would be irresponsible and disadvantageous to the government.
“It thus makes no sense and would be downright irresponsible for NGCP to proceed with the IPO and ask the public to invest in a business the basic concession of which has been publicly threatened by the government. NGCP cannot perpetrate a fraud against the investors,” the company said.
NGCP said whatever would be raised from the IPO would not be considered revenue for the company.
“As everything goes back to the government at the end of the concession period, it is to the government’s interest as well, much as it is to NGCP and the investing public’s interest, that the extension is granted and the IPO is undertaken only when it is safe to do so and when share values are optimal,” the company said.