EDC Tender Offer


Last August 3, 2017, Energy Development Corporation (“EDC”) requested for a voluntary trading suspension. It received a notice of tender offer from Philippines Renewable Energy Holdings Corporation (“PREHC”) to acquire 6.6 to 8.9 billion common shares, representing up to a third (31.7%) of it’s total outstanding common shares at a price of P7.25 per share. The offer price represented a 21.8% premium over the last closing share price of P5.95 on August 2.


PREHC is a Philippine corporation registered with the SEC on July 27, 2017. It is effectively owned by a consortium of investors comprising of the world’s largest infrastructure asset manager Macquarie Infrastructure and Real Assets (MIRA) and Singapore’s wealth fund GIC with a 60% and 40% share of ownership, respectively.

Together, MIRA and GIC manages a combined 11.5GW of renewable energy assets while EDC has an existing capacity of 1.46GW.

After the tender, the ownership of EDC will approximately be 60% First Gen (through 100% owned Red Vulcan), 30% PREHC and 10% public.


First Gen and PREHC have an intention to eventually delist EDC from the PSE to have greater flexibility over factors such as dividend policy and leverage. It will also no longer be required to comply with PSE’s reporting requirements.

After completion of the tender, EDC’s public float will fall to around 10% and will most likely be replaced in the Philippines Stock Exchange Index (“PSEi”). Recall in my previous post that the index is comprised of 30 companies with the highest full market capitalization. I also provided the 5 companies in the reserve list that may be used to replace one or more constituents. As of August 3, below is the summary of these companies:

Company Market Capitalization Free Float P/E
CEB 62,473,788,323.00 32.76% 6.31
DD 100,449,336,500.00 25.62% 186.31
RRHI 118,279,000,000.00 37.55% 24.93
DNL 87,142,867,478.00 31.26% 32.97
VLL 76,833,287,195.24 28.63% 8.83

As of this post, Robinsons Retail Holdings, Inc. (RRHI) is on track to be the likely replacement of EDC in the PSEi. Aside from the potential inclusion to the index, RRHI will also benefit from the proposed tax reform package that will increase the spending power of majority of Filipinos. As of August 3, RRHI closed at P87 per share.

Read full disclosure HERE.


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