The Energy Regulatory Commission (ERC) has ordered the National Grid Corporation of the Philippines (NGCP) to immediately complete the listing process for its initial public offering (IPO) within six months.
NGCP previously filed a petition to the ERC to further extend the deadline for the share sale due to unsuitable market conditions. However, the quasi-judicial regulator denied the request.
“NGCP failed to establish the unsuitability of the market condition at the time of the filing of the Petition. Hence, there is no cogent reason for the Commission to disturb its earlier ruling,” the ERC said in an order dated March 10 and promulgated on May 14. This means that NGCP has to go public by November 14.
The grid operator then reasoned that the COVID-19 pandemic caused severe economic and financial impact in the country, which is why its IPO requires the performance of an extremely difficult obligation.
The ERC did not buy the NGCP’s argument, nonetheless, even citing that Merry Mart Consumer, Corp. and Converge Information and Communications Technology Solutions, Inc. were able to mount their IPOs amid the pandemic.
NGCP had also delayed the public offer citing the sharp decline of the Philippine Stock Exchange index (PSEi), but the ERC dismissed this. It pointed out that the grid operator’s petition was filed in November 2018, ten months after the PSEi hit an all-time high of 9,078 points in late January that year.
“A barefaced claim that the market conditions are not suitable for its public listing a few months before the lapse of its [ten-year] period to comply with its IPO obligations, is, to the mind of the Commission, a mere excuse,” the decision read.
However, the ERC said NGCP has taken concrete steps to comply with the IPO requirements and it has engaged several financial advisors for its IPO. According to the NGCP, the process would require marketing at a global scale and discussions with investors in the United States, Europe, Middle East, and Asia.
Under Section 8 of Republic Act 9511 or NGCP’s congressional franchise, the grid firm is mandated to make public at least 20% of its outstanding capital stock or within ten years from the beginning of its operations. NGCP officially began its operations in 2009.