Possible SCTEx stake seen to strengthen MPTC’s planned IPO

THE offer from the Pangilinanled Metro Pacific Tollways Corp. (MPTC) to acquire the government’s stake in the Subic-ClarkTarlac Expressway (SCTEx) may help attract more investors to the company’s planned merger with San Miguel Corp. (SMC), analysts said.

“SCTEx is an attractive infrastructure asset, especially given the development in the areas it serves, so gaining full ownership of the government’s revenue stake at a reasonable price should significantly enhance MPTC’s tollways portfolio,” said Juan Paolo E. Colet, managing director of Chinabank Capital Corp., in a Viber message on Sunday.

This comes after the Bases Conversion and Development Authority (BCDA) expressed its willingness to sell its 50% stake in SCTEx to the tollways unit of Metro Pacific Investments Corp. (MPIC) for at least P20 billion.

“On our end, in order to consider it, our balance of debt to JICA (Japan International Cooperation Agency) is around P20 billion. So, we would want at least that amount to ensure our debt is covered for the next few years, ensuring payment to the foreign lender. That would be the starting point,” BCDA President and Chief Executive Officer Joshua M. Bingcang told reporters last week.

“So if P20 billion, that is only the capital. We want something more for the government, for the public. Normally, how much returns you would want when you have an investment made. You aim for a 100% or even a doubling of your investments,” he added.

Earlier this month, MPTC announced the deferment of its initial public offering (IPO) to 2025, citing the need to weigh its options amid plans to form a joint venture (JV) company with SMC.

MPIC anticipates signing an agreement with SMC by the second quarter, merging the companies’ tollway units, which is described as a significant company to be listed on the Philippine Stock Exchange.

“It would also be a valuable addition to the future combined tollways platform of MPTC and SMC and should create a better narrative for an IPO,” Mr. Colet added.

Currently, negotiations to acquire the government’s stake in SCTEx are ongoing, with Mr. Bingcang hoping for a conclusion next month, emphasizing that the government is inclined to sell “at the right price.”

“Government transactions regarding infrastructure, whether in construction or operations, should always be based on economic terms rather than financial proceeds, though they are somewhat related,” said Nigel Paul C. Villarete, senior adviser on public-private partnership at Technical Advisory Group Libra Konsult, Inc., in a Viber message on Sunday.

The sale of the government’s stake in SCTEx would provide funds that could be allocated to new future projects, he noted.

“However, the economic analysis should include possible incremental economic benefits from future extensions of the expressway, as well as other expressways that may follow,” he added.

The timing of monetizing the stake is crucial, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, who suggested that it could contribute more to the national government’s coffers or help reduce its debts as part of fiscal reform measures.

“A simple divestment that will net BCDA, maybe P20 billion — if there is a buyer. The logical buyer is also MPTC, now in a JV with SMC. There is no compelling financial reason to buy. I see no benefits to motorists,” said Rene S. Santiago, former President of the Transportation Science Society of the Philippines.

BCDA currently earns P2 billion from SCTEx, with a debt service of only P1 billion, Mr. Bingcang said.

The 93.7-kilometer SCTEx connects the Clark Freeport and Special Economic Zone, the Subic Bay Freeport Zone, and the Central Techno Park in Tarlac.

According to BCDA’s website, the management, operations, and maintenance of SCTEx were turned over to NLEX Corp. in 2015.

Under its 30-year concession agreement, the two parties have a 50:50 revenue-sharing agreement, Mr. Bingcang said.

MPTC is the tollways unit of Metro Pacific Investments Corp., one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

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