Joberlyn B.

Del Socorro
3 FM – 4
Prof. Kathleen Virly G. Lao
(Capital Market) MW 5:30 – 7:00 PM

Module 6 Assignment

1. What is the difference between IPO, FOO/FPO and SRO?

An initial public offering (IPO) refers to the first time a company sells shares
publicly. It is a form of equity financing. An IPO is usually momentous for a company,
often coming after years of borrowing money and attracting private investors.

A follow-on public offering (FPO) is the issuance of shares to investors by a

company listed on a stock exchange. A follow-on offering is an issuance of additional
shares made by a company after an initial public offering (IPO).

SRO (Stock Rights Offering/Issue) is when a listed company gives its existing
shareholders the right to buy new shares. Right issue will be of the company’s shares
will be at a slightly lower price than the current market price.

2. With the 2021 SRO from ACEN (AC Energy Philippines, Inc), assuming you are
a stock holder since 2015, will you opt to avail the SRO? What is the possible
disadvantage of availing SRO?

Yes, AC Energy is one of the fastest growing energy companies with over $1
billion of invested and committed equity in renewable and thermal energy in the
Philippines and around the region. Ayala-led AC Energy Philippines Inc. (ACEN) has
slated February next year as the offer period for its stock rights offering (SRO), in which
2,267,580, 434 common shares will be issued.

The possible disadvantage, SRO typically requires holders to shell out money for
the new shares that will be issued to them. If they choose not to subscribe to the said
shares then they run the risk of having their holdings diluted (the value of their holdings
will decrease because of the increase in supply).

3. What is purpose of the FOO of ACEN? Again, as a stockholder, will you opt to
avail the FOO and why?

ACEN said the FOO price of P6.50 per share was determined based on a book
building process which saw significant participation from leading global long-term
institutional investors, resulting in multiple times oversubscription.

Yes, a follow-on offering can be diluted, meaning that the new shares will lower a
company’s earnings per share (EPS), or undiluted, if the additional shares are
preferred. Also, according to what I've read. The FOO completes the company’s
successful fundraising efforts this year and allows it to play a meaningful role in the
green-led recovery.