Why Did Manny Pangilinan's Metro Pacific Investments Corp. File to Voluntarily Delist from the PSE?

On Thursday (April 27), Metro Pacific Investment Corp. (MPIC), the holding company of various businesses that includes Manila Electric Company, Metro Pacific Tollways Corporation, Maynilad Water Holding Company, Inc., and Metro Pacific Light Rail Corporation, filed to voluntarily delist from the Philippine Stock Exchange.

In a disclosure to the bourse, MPIC said it had received a tender offer notice from a consortium that includes Metro Pacific Holdings Inc., GT Capital Holdings Inc., Mit-Pacific Infrastructure Holdings Inc., and MIG Holdings Inc.

The tender offer involves all the outstanding common shares of MPIC not currently owned by the bidders at P4.63 per share, for a total of about P49 billion. The price is about 22 percent higher than the Volume Weighted Average Price (VWAP) of MPIC’s common shares.

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According to a statement from MPIC, the company’s board met and unanimously approved to file for the voluntary delisting of the company from the PSE. MPIC also requested to suspend trading for two days until April 28 to allow investors time to review the deal.

Why is MPIC Delisting?

In a separate filing, GT Capital, the holding company of the Ty family that owns companies like Metrobank, Federal Land, and Toyota Motor Philippines Inc., issued a statement confirming the deal.

“The Bidders feel that the intrinsic value of MPIC’s core investments in infrastructure in the Philippines has not been fully reflected in MPIC’s share price for some time,” the statement from GT Capital said. “The tender offer and successful delisting will allow MPIC’s minority shareholders to realize a significant premium over historical share prices of MPIC. At the same time, a delisted MPIC will be better aligned with the objectives of the Bidders to continue investing in long-term infrastructure projects supporting sustainable economic growth in the Philippines.”

The entry of Mitsui is also seen to benefit MPIC in the years ahead. Mitsui is one of the largest conglomerates in Japan and the world with a diverse portfolio that includes interests in, among others, mineral and metal resources, energy, infrastructure projects, mobility, chemicals, iron and steel products, food, retail management, and many others. 

“Mitsui’s leading capabilities and expertise in the global infrastructure business will further contribute to solidifying MPIC’s unparalleled offerings and position in the Philippines,” the GT Capital statement said. “First Pacific and GT Capital warmly welcome the long-term value and synergies offered by the strategic partnership with Mitsui.” 

Deal structure

Under the tender offer, First Pacific, through its Philippine affiliate Metro Pacific Holdings Inc. will spend about $90 million (about P5 billion) to increase its stake in MPIC by as much as 3.8 percent, while GT Capital will increase its stake to a maximum of 20 percent by paying a consideration of approximately $70 million (about P4 billion) in the transaction for the residual 2.9 percent.

Meanwhile, Mit-Pacific Infrastructure Holdings Corporation which is a joint venture of Mitsui and Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development will buy up to 20 percent of MPIC under the tender offer, which would make it a shareholder for the first time in a new strategic initiative. The management investment group, which is controlled by MPIC Chairman Manny Pangilinan, would buy up to 10 percent. 

“Participation of the management investment group is expected to closely align the interests of management with shareholders of the newly private MPIC,” the statement read.

The tender offer values MPIC at P133 billion in equity value.

What is MPIC

MPIC is one of the country’s biggest infrastructure holding companies. Its portfolio includes 47.5 percent of Meralco, the Philippines' biggest electricity distributor and one of the country’s largest electricity producers; 99.9 percent of Metro Pacific Tollways Corporation, the largest toll road developer and operator in the Philippines, which developed and operates some 230 kilometers of expressways, including the North Luzon Expressway (NLEX), Subic-Clark-Tarlac Expressway (SCTEX), Cavite Expressway (Cavitex), and Cavite-Laguna Expressway (Calax); 52.8 percent of Maynilad Water Services, Inc., one of two private water concessionares in Mega Manila and the largest water and sewerage provider in the Philippines by population coverage; 20.0 percent of Metro Pacific Health Corporation, the largest private hospital operator and healthcare service provider in the Philippines; and other assets.

MPIC’s two biggest shareholders are Metro Pacific Holdings, which owns 46.08 percent, while GT Capital Holdings controls 17.1 percent. 

GT Capital acquired an initial 15.6 percent stake in MPIC in May of 2016, making it the company’s largest minority shareholder.