October 22, 2013

GT Capital shelves IPO plans for power unit

The CFO of GT Capital Holdings Inc was quoted by the news website interaksyon.com as saying the IPO plans for its power unit Global Business Power Corp (GBPC) has been shelved following the recent entry of strong partners. Orix Corporation of Japan and the Manila Electric Co (MER, Buy) each took a 20% stake in GBPC. GT Cap and First Metro Investment Corp (the investment banking arm of Metrobank) retain the remaining 60%.

Our take: The move to defer the public listing of GBPC should enhance the attractiveness of GTCAP and MER as the main avenues for investors to participate in the company’s growth. GBPC is currently the biggest private power plant operator in the Visayas and has signed a memorandum of understanding with MER for potential partnerships in power projects in Mindanao.

This bodes well for MER which has ventured into power generation to expand its revenue base and cushion any regulatory risks in its distribution business. We are keeping our Buy rating on MER.– Ricardo Puig