CREC gets approval for initial public offering

By Sheldeen Joy Talavera, Reporter

SAAVEDRA-LED Citicore Renewable Energy Corp. (CREC) has obtained the approval of the Philippines Stock Exchange, Inc. (PSE) for its planned P12.9-billion initial public offering (IPO).

In an e-mailed statement on Thursday, the renewable energy company said that PSE issued its notice of approval on Jan. 29, approving the listing of its up to over 10.04 million common shares.

The final price offer will be determined on March 6, with the offer period scheduled from March 11 to 15. The tentative listing and the start of trading on the exchange are set for March 22.

CREC is set to offer up to 2.9 billion common shares at a maximum price of P3.88 apiece, including an additional 435 million outstanding common shares for overallotment.

“Proceeds from the IPO will be used to partially fund CREC’s capital expenditures and pipeline development for solar energy plants and battery energy storage system (BESS), as well as general corporate purposes,” the company said.

As of Sept. 30, the company had a total installed capacity of 285.1 megawatts across Luzon, Visayas, and Mindanao.

CREC intends to add approximately one gigawatt of ready to build/under construction solar energy capacity each year through 2027.

“The PSE’s approval is subject to CREC’s compliance with all PSE-mandated conditions and requirements,” it said.

On Jan. 17, the Securities and Exchange Commission (SEC) issued the pre-effective approval for CREC’s IPO.

CREC President and Chief Executive Officer (CEO) Oliver Y. Tan has said that the company plans to spend around P35 billion in capital expenditures this year for renewable energy (RE) projects.

Sought for comment, China Bank Capital Corp. Managing Director Juan Paolo E. Colet said that the market will closely watch CREC’s IPO but ponder on “whether market conditions are conducive enough for successful IPOs.”

“The performance of the CREC offering will help answer that,” Mr. Colet said in a Viber message.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said that CREC’s IPO may be well-received due to the growing emphasis on renewable energy in the country.

“Investors will scrutinize CREC’s financial health, growth aspects, and past performance. A strong track record, sound financials, and a clear business strategy may enhance the IPO’s reception,” Mr. Arce said in a Viber message.

CREC is the parent company of Citicore Energy REIT Corp. (CREIT), the country’s first real estate investment trust listing focused on renewable energy. CREIT concluded its IPO in February 2022, which raised P6.4 billion.

On its debut, CREIT’s shares closed at P2.84 apiece, higher by 11.37% than its IPO price of P2.55.

“I don’t think this should be directly compared with CREIT because CREC has a different business model as a renewable energy developer whereas CREIT is basically a lessor,“ Mr. Colet said.

“CREC will try to attract an investor base that is willing to take more risk for potentially higher returns versus the steady yield growth of CREIT,” he added.

Mr. Colet noted, however, that the future growth of CREIT may depend on CREC because of “the expectation that the latter will provide the former with a pipeline of future asset infusions.”

“I welcome the decision of CREC to tap the equities market to raise capital since RE projects are very much needed these days given that we are racing against time to address climate issues,” PSE President and CEO Ramon S. Monzon said in a statement.

With its clearance of the first IPO for 2024, the PSE is expecting at least six IPOs this year.