Last Wednesday, June 17, the much-awaited news came: Globe Telecom Inc. (trading symbol: GLO) disclosed to the Philippine Stock Exchange (PSE) that its board approved the proposed initial public offering (IPO) — and listing — of the outstanding common shares of its affiliate, Mynt Inc. (Mynt), better known as the parent company of GCash.
The offering will consist of both primary and secondary shares representing at least 12% of Mynt’s total outstanding post-IPO capital stock. Mynt’s common shares have a par value of P0.03 per share.
To recall, Mynt has executed several foundational adjustments to prepare its corporate architecture for public trading. Mynt executed an intensive stock split, reducing the share par value from P1 to P0.03 to multiply outstanding common shares and maximize retail liquidity.
The plan to allocate 12% of Mynt’s total outstanding shares fits within the adjusted public float rules issued by the Securities and Exchange Commission (SEC). Under these new rules, large issuers with expected market capitalization of P200 billion and above are mandated to have a minimum public ownership of as low as 12%.
The timing of Mynt’s IPO is yet to be determined. Obviously, this will be dictated by market conditions, which at present is turning more favorable considering the encouraging geopolitical and economic developments unfolding here and abroad.
The offer price is still to be determined, too. But reading between the lines of the disclosure, this would be affected by the plan to list at least 12% of Mynt post-IPO capital stock.
Also, reports indicate that Mynt is planning to raise around US$1 billion to US$1.5 billion (equivalent P62 billion to P93 billion at a peso-dollar exchange rate of P62: US$1. This will be also factored into Mynt’s offer price.
Nevertheless, the final basis for Mynt’s offer price should be essentially derived from its estimated intrinsic value.
As of today, the distribution of ownership in Mynt is as follows: Globe Telecom, 35%; Ant Group 34%; Ayala Corporation, 13%; MUFG Bank, 8%; with the remaining balance held by private equity firms like Warburg Pincus and Bow Wave.
Market concerns
Come to think of it, the IPO is huge in any way you look at it. It’s something that the market has never seen or even experienced. As previously noted, Mynt is planning to raise around US$1 billion to US$1.5 billion. At the exchange rate quoted earlier, the IPO may entail the sales of shares equivalent P62 billion to P93 billion.
To comply with the public float listing requirement and at the same time accept the assumed value that is floating in market circles of about US$8 billion (following some of the strategic capital injections made by local conglomerates and international banking heavyweights), Mynt’s 12% will still entail an IPO issue amounting to US$960 million or P59.52 billion.
With the market trading on a daily total value turnover of about P6 billion, the IPO would be equivalent to roughly 10 days of total daily market transactions. This would be some kind of an all-time high that could possibly affect the market’s already low liquidity. Joel de la Peña, market strategist and chief trader of H.E. Bennett Securities Inc. shares this view.
ICTSI speculation
Meantime, listed stock International Container Terminal Services Inc. (ICTSI) of Enrique Razon Jr. also made the big news last Tuesday. The subject was about its speculated plan to seek listing outside of the Philippines that may also lead into delisting like the other strong companies that left the local bourse . One rumor is that ICTSI might move to the bigger Hong Kong Stock Exchange.
ICTSI is described as just “within striking distance” from becoming the first PSE Index stock to reach a P2 trillion market valuation. This valuation came as more and more market participants have been increasingly buying ICTSI as the market’s premier stock that is also providing the Philippines exposure as a good investment market.
Because of this, ICTSI’s stock price has successively hit record highs. It’s anticipated P2 trillion valuation will become the largest in the market, which is also noted to be more than 2.5 times the value of the second highest priced stock, SM Investments Corporation (SMIC).
Should ICTSI decide to delist, wherein its present public float is estimated to be about 50% of the company’s capital stock, the tender offer would amount to close to P1 trillion at prevailing prices.
The ultimate question with this market speculation of delisting is whether the PSE can afford to lose ICTSI.
New conditions
Joey Roxas, president and market strategist of Eagle Equities Inc., said that even without an explicit answer to the above question from the management of ICTSI, he is confident that listing with the Hongkong Stock Exchange will not lead to the company delisting from the local bourse. “There is no added advantage,” he said. Being listed in both bourses will even better enhance the com…
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