WOULDN’T you want to invest in a very profitable company that enjoys monopoly through a government franchise lasting 25 years? Wouldn’t you buy their IPO (initial public offering) shares as they become available?
As Sen. Ana Theresia “Risa” N. Hontiveros has pointed out in a February 10 Senate hearing, this company has paid out P187.8 billion in dividends to their three shareholders, in just ten years of their 25-year franchise, even exceeding the P168.9 billion total amount of concession fees the government would collect to the end of the franchise in 2034.
That company is the National Grid Corp. of the Philippines (NGCP), the monopoly in the power transmission sector. Under its franchise (Republic Act 9511, Section 8) it is required to undertake, within 10 years from start of its operations, a public offering of its shares so that at least 20 percent of outstanding shares are shared and participated in by the public. This follows the national policy to “encourage the widest participation of ownership in enterprises, enhance the democratization of wealth, promote the development of the capital market…” (Section 2, Securities Regulation Code).
This IPO by NGCP, which the public eagerly awaits, has been long delayed because the company received its franchise on December 1, 2008; and so the IPO should have been undertaken already in 2018. Various reasons have been presented for the delay. But the Energy Regulation Commission (ERC), after NGCP’s motions for reconsideration, finally ruled on March 10, 2021: “NGCP is hereby DIRECTED to complete its compliance with the IPO requirements until the successful listing thereof within six months from receipt of this order.”
This would be a welcome development for us public investors as we expect this to happen year 2021.
And who have been the favored NGCP investors so far? Extremely limited and very exclusive. The ownership of NGCP is shared among just three:
1. Monte Oro Grid Resources Corp. (30 percent + 1 share); owned 100 percent by One Taipan Holdings Inc., which is, in turn, 100-percent owned by Henry T. Sy Jr.
2. Calaca High Power Corp. (30 percent + 1 share); 100-percent owned by Pacifica 21 Holdings Inc., which is in turn 68.33 percent owned by Robert G. Coyiuto Jr.
3. State Grid International Development Ltd. of China (40 percent).
These are the principal beneficiaries of these generous dividends. We could all share in their prosperity when the IPO happens this year.
But wait. There is some plan to do a share swap between, on the one hand, One Taipan and Pacifica 21 and, on the other hand, Synergy Grid and Development Phils. (SGP), a company listed at the Philippine Stock Exchange owned by Henry T. Sy Jr. (44.5 percent) and Robert Coyiuto Jr. (34 percent). It’s a kind of back-door listing that aims to be a substitute compliance for an NGCP listing. It’s a fancy layering of corporate ownership.
Without going to detailed explanation, what would result is that NGCP shares will not be sold to the public through an IPO. It’s going to be a mockery of the intent of the government’s “democratization of wealth” policy and that of the franchise, through a back-door listing arrangement that raises a lot of questions.
Can’t the investing public share a bit of the largesse from NGCP’s monopoly?
Santiago F. Dumlao Jr. past president of the Finex, is the current Secretary-General of the Association of Credit Rating Agencies in Asia. His views here, however, do not necessarily reflect those of Finex and the BusinessMirror.