First Pacific (142 HK): Maynilad's IPO Price Firmed

• First Pacific Co (142 HK)‘s 49.9%-held MPIC is spinning off Maynilad, a distributor of potable water and provider of sewage services, on the Philippine exchange.

• The IPO has been priced at PHP 15/share, down 25% from earlier expectations. Proceeds may reach PHP 34bn (~US$580mn), in the largest Filipino IPO since 2021.

• First Pac’s NAV discount has drifted off a recent multi-year narrowing, but remains elevated for a multiple cross-border, difficult to short holdco.

The Trade:

• Yes - there is embedded value in unlisted MPIC; however pricing for Maynilad’s IPO is below expectations. Plus the IPO adds yet another listed company to First Pac’s stable.

• If in (stub set up), I’d be taking money off the table.

This insight is labelled bearish as I’m not bullish here.