Maynilad Defies Market Gloom With Philippines’ Largest IPO in Three Years

Massive Share Offering Sets Stage for Market Comeback

Maynilad Water Services Inc., the water utility giant serving millions in Metro Manila, is pushing forward with a landmark initial public offering that could raise up to 28.5 billion pesos ($490 million) despite challenging market conditions. The company, controlled by Indonesian billionaire Anthoni Salim through Metro Pacific Investments Corp., has priced its shares at 15 pesos each for what represents the Philippines’ largest IPO since instant noodle maker Monde Nissin’s $1 billion offering in 2021.

Strategic Pricing Amid Market Headwinds

While Maynilad initially targeted a maximum price of 20 pesos per share in its prospectus, the company settled on a more conservative 15 pesos valuation in light of current market sentiment. According to Benjamin Garcia, head of research at AP Securities, the pricing appears prudent given the circumstances. “The offer is prudently priced and offers sufficient modest upside,” Garcia noted, adding that Maynilad trades at 7.2 times estimated 2025 price-to-earnings ratio, a slight premium to rival Manila Water’s 6.9 multiple.

The company plans to list on the Philippine Stock Exchange starting November 7, offering up to 1.9 billion shares that include 249 million primary common shares for over-allotment and 24.9 million common shares earmarked for Salim’s First Pacific company., as additional insights

Corruption Scandal Clouds Investor Sentiment

The IPO comes at a delicate time for Philippine markets, with the benchmark stock index declining nearly 7% this year amid a government corruption scandal involving alleged kickbacks for flood control projects. Jonathan Ravelas, managing director at Manila-based consultancy eMBMS, captured the market’s cautious mood: “The corruption scandal soured the appetite of many retail investors even though Maynilad is an attractive stock. It’s hard to attract investors when you have a systemic issue of corruption in government.”

Despite these challenges, Maynilad secured significant institutional support, with the International Finance Corp. and Asian Development Bank committing to purchase shares worth $245 million at the offering price.

Strong Fundamentals Underpin Offering

Maynilad’s financial performance provides a solid foundation for the offering. The utility reported 7.5 billion pesos in first-half net income, representing a 19% increase from the same period in 2024. The company serves 17 cities and municipalities in western Metro Manila and parts of Cavite province, positioning it as essential infrastructure with predictable revenue streams.

Garcia highlighted the stock’s defensive characteristics, noting “Maynilad is a viable defensive and dividend play primarily due to its high earnings visibility and generous dividend policy.” The company plans to distribute approximately 50% of its net income as annual dividends, with available cash flow for payouts potentially increasing significantly from 2028 onward as capital expenditure requirements diminish.

Complex Ownership Structure and Secondary Offering

The offering involves multiple layers of share sales beyond the primary offering. Maynilad Water Holding, whose shareholders include Metro Pacific, DMCI Holdings of tycoon Isidro Consunji, and Japan’s Marubeni Corp., plans to sell 354.7 million shares at the IPO price in a secondary offering that could raise an additional 7.1 billion pesos.

Metro Pacific, led by CEO Manuel Pangilinan, maintains diverse interests across hospitals, toll roads, agriculture, and power generation. The Salim family’s First Pacific also holds stakes in Philippine telecom giant PLDT and Philex Mining Corp., reflecting the conglomerate’s broad footprint across Southeast Asian markets.

Capital Allocation and Growth Strategy

Proceeds from the offering will be directed toward capital expenditures and general corporate purposes, supporting Maynilad’s ongoing infrastructure development and service expansion. The company’s essential service nature and regulated returns provide a measure of insulation from economic cycles, though the current market environment presents immediate challenges for the stock’s debut performance.

The successful execution of this offering could signal renewed confidence in Philippine markets and potentially pave the way for other companies considering public listings. However, the short-to-medium term performance will likely depend on how quickly investor sentiment recovers from the current corruption-related concerns affecting the broader market.

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