By Myrna M. Velasco
Pangilinan-led Metro Pacific Investments Corporation (MPIC) is firming up a two-tiered sell-down process for the shares of its hospital subsidiary Metro Pacific Hospital Holdings, Inc. (MPHHI) targeted to be completed this year until early part of 2020.
MPIC Chairman Manuel V. Pangilinan told reporters that the first part of the sell-down will be to offer exchangeable bonds and to follow shortly after that will be an initial public offering (IPO) of MPHHI at the Philippine Stock Exchange.
He said the exchangeable bonds tender has to be undertaken in the next 2 to 3 months so it could be perfectly timed with the immediate need for cash infusion at Metro Pacific.
“I think we’ll eventually put it to bed – the IPO. I just don’t know whether the schedule is firm enough that we can conclude it within the year,” he said.
But while the Metro Pacific hospital group is sorting out timelines for the stocks offering, Pangilinan said “perhaps for certain that we can raise the funds for MPIC and for the hospitals itself – maybe, we should issue exchangeable bonds within the next 2 to 3 months.”
The exchangeable bonds to be issued, he said, will be “convertible directly to the hospitals – to the hospital holding company MPHHI.”
Pangilinan qualified “the processes started for the hospitals – the main path they’re taking is an IPO,” but he said the size of the listing, the price per share as well as the targeted proceeds will depend on the final estimate that the Metro Pacific hospital group will eventually come up with.
The institutional investors being targeted in the IPO, he qualified, “will be the same people who will buy the exchangeable bonds – because what we’re looking at is a mandatory exchange into the MPHHI shares at pre-determined ratio already, so then we’re not pressed for time to do the IPO.”
An exchangeable bond is a type of hybrid security that may comprise of a straight bond with an embedded option to exchange that bond (at a later date) for the stock of a company other than the issuer – such as a subsidiary of that issuing company.
MPHHI currently has 14 operating hospitals under its charge – including top-tier hospitals like the Asian Hospital in Alabang; the Makati Medical Center and Cardinal Santos Medical Center as well as several regional hospitals across Luzon, Visayas and Mindanao.
Pangilinan noted there are still hospital acquisitions being worked on, but it has just been taking time to conclude the deals because the Metro Pacific hospital group has re-focused attention on the IPO and exchangeable bond offer plans. The last acquisition of the group was St Elizabeth Hospital in General Santos City.
The initial valuation set for the hospital group of MPIC had been at US$2.0 billion; and the amount targeted to be raised by the parent firm this year is at P15 billion to P20 billion.
For now, Pangilinan similarly indicated that the group’s interest in the Medical City had been put on hold. “We have not followed that up because the hospital group is very busy with expanding in respect of existing hospitals other than Medical City and this IPO as part of fund raising for Metro,” he stressed.