Meralco Weighs IPO or Backdoor Listing for MGreen

The Manuel V. Pangilinan-led Meralco Group is considering an initial public offering (IPO) or a backdoor listing for its renewable energy unit, MGen Renewable Energy Inc. (MGreen), as it seeks to expand its presence in the clean energy sector.

SP New Energy Corp. (SPNEC), a listed renewable energy company controlled by the Meralco Group, informed the Philippine Stock Exchange (PSE) that MGreen’s parent company, Meralco PowerGen Corp. (MGen), is evaluating both options.

“As part of this review, the board of MGen approved the engagement of professional advisors to assess and determine the feasibility and structure of such a transaction, including compliance with applicable regulatory requirements,” SPNEC said in a disclosure.

A backdoor listing is also being considered, which would involve MGen infusing assets into SPNEC to consolidate its renewable energy operations under one publicly traded entity.

Under PSE rules, a backdoor listing occurs when a listed company acquires the shares or assets of an unlisted firm or vice versa, effectively bringing the unlisted firm to the stock market without undergoing a traditional IPO process.

Meralco took control of SPNEC from Solar Philippines, a company founded by businessman Leandro Leviste, after acquiring a controlling stake through MGreen.

While no final decision has been made, analysts say a backdoor listing might be the more logical route.

“Since MGreen’s main asset is SPNEC, it makes sense to do a backdoor listing so that there is just one listed company housing the entire renewable energy business of MGen,” China Bank Capital Corp. managing director Juan Paolo Colet told The STAR.

He added that such a move would likely lead to a follow-on offering within a year, allowing MGreen to raise additional funds for its renewable energy projects.

“On the other hand, an IPO of MGreen seems more straightforward in terms of execution, but some investors might find it odd for MGen to have two listed renewable energy platforms,” Colet said.

MGreen is a key player in Meralco’s transition to clean energy, with plans to develop 1,500 megawatts of renewable capacity in the next few years.