Wilcon Depot to replace First Gen in PSEi

MANILA, Philippines — Home and construction supply retailer Wilcon Depot Inc. is set to replace First Gen Corp. in the Philippine Stock Exchange index (PSEi).

In a memo released Wednesday, the PSE said Wilcon will replace the Lopez family-owned power producer in the 30-member index as a result of the company’s tender offer exercise with US-based private equity firm Kohlberg Kravis Roberts & Co (KKR).

First Gen will be removed from the Industrial index as well. The local bourse operator did not elaborate the reasons for First Gen’s expulsion from the two indices.

The PSE’s decision will take effect on October 11. Following the announcement, shares in First Gen dipped 2.62% to close at P31.65 apiece on Wednesday.

“In view of the results of the tender offer exercise for First Gen Corporation shares, FGEN will be removed from the PSEi and will be replaced by Wilcon Depot, Inc,” the PSE said in the memo.

KKR, an existing shareholder, will acquire additional shares from First Gen through a block sale on October 8.

Under PSE rules, there are several reasons that could trigger a company’s expulsion from indices, including any corporate action that causes a significant change in a firm’s ability to satisfy the requirements.

Sought for comment, Luis Limlingan, head of sales at Manila-based brokerage Regina Capital, said First Gen’s transaction with KKR likely “reduced” the company’s free float level, which refers to the portion of a firm’s outstanding shares that are freely available and tradable in the market.

Existing rules require publicly-listed companies to maintain a free float level of 15% of its outstanding shares to be included in PSE indices. Starting December 2022, the public float requirement for index inclusion will be hiked to 20%.

First Gen’s public float level is currently at 18.74% based on its stock data at the PSE. It is still unknown what the company’s free float level would be post-transaction with KKR.