By Mark T. Amoguis
Senior Researcher

PLANS OF Metro Pacific Hospital Holdings, Inc. (MPHHI) to embark on an P83.3-billion maiden share sale drove the stock movement of parent Metro Pacific Investments Corp. (MPIC) last week.

A total of 87.95 million MPIC shares worth P452.46 million were traded from Sept. 9 to 13, data from the Philippine Stock Exchange (PSE) showed.

MPIC went down by 1.2% to P5.14 apiece last Friday from its P5.20-per-share finish on Sept. 6. Meanwhile, it has rallied by 11.5% since the start of the year.

Stock market watchers traced MPIC’s stock price activity to the company’s plan to list its hospital unit MPHHI by November this year despite receiving interest from buyout firms to buy as much as a 40% stake in the hospital subsidiary.

“The Pangilinan-led conglomerate returned to investors’ radar this week, following news about the public listing plans of its hospital unit,” Regina Capital Development Corp. equity analyst Rens V. Cruz II said in an e-mail.

This planned initial public offering (IPO) is estimated to rake in at least P75.1 billion worth of proceeds from the secondary offer, assuming over-allotment is exercised, he noted.

“These potential capital inflow enticed participants to re-position in the stock, given how undervalued MPI has been in the last few months,” Mr. Cruz said, referring to the MPIC’s ticker symbol in the stock exchange.

“So, right now, after the announcement that the hospital unit will be sold, it certainly piqued investor interest on MPI,” AP Securities, Inc. senior equity analyst Rachelle C. Cruz said in a phone interview.

Ms. Cruz also noted that there are other private equity companies interested in buying MPHHI, which would seem that MPI is trying to get a higher price either via private equity placement or through the IPO.

Bulk of the proceeds, she said, will go to MPIC to reduce its debt burden and improve cash flows. “In terms of who would benefit from this asset selldown, it’s really MPI. That’s why a lot of investors are looking at MPI and the hospital selldown,” she said.

Last Sept. 4, MPHHI said it plans to offer up to 417.09 million common shares, consisting of up to 35.82 million new common shares as part of the primary offer, priced tentatively at a maximum of P182 each.

At this price level, the hospital unit of MPIC could raise as much as P83.3 billion or approximately $1.6 billion.

The remaining 381.27 million existing common shares will be sold by selling shareholder, MPIC. This will include up to 40.771 million shares for the over-allotment option. MPHHI will not get anything from the sale of MPIC’s shares.

Should it secure regulatory approvals from the Securities and Exchange Commission and the PSE, the final offer price is set to be announced on Nov. 14. The offer period will run from Nov. 18 to 22.

MPHHI’s shares are expected to be listed on Dec. 2 under the ticker “HOSP.”

It operates 14 hospitals with more than 3,200 beds across the country, including Makati Medical Center and Cardinal Santos Medical Center.

Meanwhile, Reuters reported in August that buyout companies such as KKR & Co., Inc., The Blackstone Group, Inc., and CVC Capital Partners are lining up to compete for a 40% stake in MPIC’s hospital business valued between $2 billion and $2.5 billion.

In the first half of 2019, MPIC’s attributable net income slipped by 9.3% to P8.11 billion from P8.94 billion in 2018’s comparable six months.

“At this point, MPI is looking for a strong support to use as a jumping board to rally again, hopefully near the week-long price floor of P5.10. Indicators are still bullish, but not yet overbought, so prices are still likely to improve. Next resistance near-term now at P5.35,” Regina Capital’s Mr. Cruz said.

Meanwhile, AP Securities’ Ms. Cruz said that investors are waiting for news on how the hospital unit will be valued because of the large difference between proceeds from IPO and buyout companies.

“Investors are waiting before snapping up MPI probably [in] November and December until there’s deal whether IPO or private equity buyout. I think the [share] price will move sideways until that period,” she said.

MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls.