CREC move to go public seen to test IPO market

CITICORE Renewable Energy Corp. (CREC), the parent company of listed Citicore Energy REIT Corp. (CREIT), has sought regulatory approval to conduct an initial public offering (IPO) to develop its pipeline of projects.

In a statement on Monday, the company said it had filed a registration statement with the Securities and Exchange (SEC) Commission for its proposed IPO of its common shares.

The company intends to offer up to 2.9 billion shares, at a price of up to P3.88 each from March 4 to 8 next year, and may exercise an over-allotment option of up to 435 million additional shares.

Maximum gross proceeds of P11.25 billion may be raised from the offer, CREC said, assuming a final price offer of P3.88 per share and a final offer of 2.9 billion firm shares.

This excludes proceeds from the exercise of the over-allotment option.

“Net proceeds from the Offer are intended to be utilized for CREC’s and its subsidiaries’ capital expenditures and pipeline development,” the company said.

It said that the offer, final offer price, final number of offer shares, and allocation of the proceeds “will depend on market conditions, the circumstances surrounding the offer, and will be subject to favorably securing the necessary regulatory approvals.”

The company filed a draft of the preliminary offering circular along with the registration statement for the review of the SEC and the Philippine Stock Exchange, Inc.

According to the company’s prospectus, the pricing will be finalized on Feb. 28, 2024.

As of Sept. 30, the company had a total installed capacity of 285.1 megawatts across Luzon, Visayas, and Mindanao.

Sought for comment, Juan Paolo E. Colet, managing director of China Bank Capital Corp., said that CREC’s IPO will test “whether the IPO market is back.”

“It remains a challenging market for large IPOs, but there is a chance for success especially if the final price is attractive and there is a clear dovish pivot in monetary policy,” Mr. Colet said in a Viber message.

April Lynn Lee-Tan, chief equity strategist of COL Financial Group, Inc., said the IPO is favorable for CREC as it belongs to the power sector, which has been an outperformer and resilient this year.

“However, the question is the sustainability of the market’s strong performance the past week. If the market weakens again, demand might not be there,” she said.

Ms. Lee-Tan said that some investors might prefer CREIT since it gives cash dividends.

CREIT, as the country’s first real estate investment trust listing focused on renewable energy, concluded its IPO in February 2022, which raised P6.4 billion.

On its debut, CREIT’s shares closed at P2.84 apiece, higher by 11.37% than its IPO price of P2.55.

In the third quarter, the company’s attributable net income climbed by 29.7% to P396.09 million from P305.32 million in the same quarter last year.

Gross revenues grew by 52.2% to P507.15 million while gross expenses increased by 31.3% to P507.15 million.