(Update) PNOC-EDC IPO on Dec 13: Likely oversubscribed

PNOC-Energy Development Corp. (PNOC-EDC), the Philippines' largest producer of geothermal energy, may raise as much as P16 billion next month from its initial public offering (IPO), which is expected to attract huge market interest amid rosy economic prospects. "Past IPOs have been oversubscribed and this may help PNOC. Right now, everybody wants to get shares from the IPO market," AB Capital research head Jose Vistan said. The PNOC-EDC IPO is the most anticipated public offer of a state company since the government's sale in the stock market of shares in Petron Corp. PNOC-EDC, a unit of state-owned Philippine National Oil Company (PNOC), has set a price range of P2.50-P3.20 per share for its IPO, according to company president Paul Aquino. The company will sell 4.2 to 5.2 billion shares to both domestic and foreign investors in its IPO. It will list on the Philippine Stock Exchange on December 13. PNOC-EDC currently operates 11 geothermal steamfields in four contract areas with power plants having a total installed capacity of 1,149-megawatts, accounting for nearly 60 percent of the country's installed geothermal capacity. Second-largest geothermal power source "PNOC-EDC offers a very interesting story for investors. It accounts for 60 percent of the geothermal power output of the second largest geothermal power producer in the world," Wealth Securities analyst Ricardo Puig said. "However, we need to be given a firmer grasp of their growth prospects and how they plan to grow their revenues. Right now, it is still not very clear where sales growth will come from because they are limited by the disclosure rules of the US SEC," Puig said. Seventy percent of the PNOC-EDC's IPO shares will be sold to foreign investors. The international roadshow for the IPO will run from November 20 to December 1. The final offer price will be known on December 4. Fifty percent of the total shares of PNOC-EDC would represent new or primary offering. The other half accounts for secondary shares or those to be sold by parent firm PNOC. PNOC-EDC has tapped BDO Capital and Investment Corp., Development Bank of the Philippines, ING and Land Bank of the Philippines as issue managers and domestic lead underwriters. CLSA Ltd. will be the sole bookrunner and international underwriter. The proceeds are expected to fund the P2.98-billion budget set by the company for 2007. Bulk of the capital expenditure would go to the Phase 1 of the North Luzon wind power project phase. - With additional report from Patricia de Leon, GMANews.TV