Monday, 5 April 2010

First Pacific’s Philippine investments last year adds up to about $1.3 billion

Miguel R. Camus
Business Mirror

HONG KONG-based conglomerate First Pacific Co. Ltd.,  led by  businessman Manuel V. Pangilinan,  invested $1.3 billion or almost P60 billion in the Philippines last year after snapping up key power and mining assets.

In a filing to the Hong Kong Stock Exchange last month, First Pacific said the bulk of the capital spending was used to make its ownership debut in power retailer Manila Electric Co. (Meralco) and to strengthen its hold over gold and copper miner Philex Mining Corp.

In particular, First Pacific invested the lion’s share, or $934 million, to enter Meralco through Pilipino Telephone Corp. (Piltel), a unit of telco giant Philippine Long Distance Telephone Co. (PLDT) unit and Metro Pacific Investments Corp., after it bought shares equivalent to 34.5 percent in the country’s largest electricity distributor.

First Pacific is a part owner of PLDT and is also the parent company of Philippine holding firm Metro Pacific, which has interests in toll road, hospital, water supply and port operation businesses.

Along with local affiliate Two Rivers Pacific Holdings Corp., First Pacific also spent $313 million to buy an additional 20.6 percent of Philex, almost half of which was acquired through a block sale from  a group led by former trade minister Roberto V. Ongpin.

The foreign conglomerate likewise spent another $69 million to boost Philex’s ownership in the Silangan Mindanao Mining Co. Inc. in Northern Mindanao and to increase its stake in Pitkin Petroleum Plc. to a fifth.

The buying spree last year was bigger than the $1 billion spent on Philippine-based investments in 2008.

“Following a period of significant investment activities, the company’s focus remains intently on improving performance of the group’s businesses and delivering higher profits and value in 2010,” First Pacific told the Hong Kong bourse.

This, as the group said it will  “continue to explore investment opportunities in existing core businesses across the region.”

Just three months into 2010, acquisition hungry First Pacific further bolstered its ownership in Philex and Meralco.

In late January, First Pacific, through Two Rivers, secured another 5.9 percent of Philex from state-run pension fund Government Service Insurance System for P6 billion.

The transaction brought the group’s ownership to 46.6 percent, sealing its place as the single-largest shareholder in the country’s largest miner.

In addition, Metro Pacific last week also concluded a P22.4-billion deal to buy another 6.6 percent of Meralco from Lopez-led First Philippine Holdings Corp. This brings the First Pacific Group’s holdings in the power retailer to over 41 percent.

Rival San Miguel Corp., which is also diversifying into power, mining and infrastructure, owns 27 percent of Meralco.

As part of the plan, the group plans to transfer most of its Meralco shares this year to newly formed holding company, Beacon Electric Asset Holdings Inc.

Beacon Electric already holds a fifth of Meralco and plans to raise this to 34.8 percent, or just shy of the tender offer rule, when Piltel transfers a 13.7-percent Meralco stake in May this year.  

The consolidation of shares under one company will allow the holding firm to access debt financing for any potential Meralco purchases in the future, using its own shares in the power retailer as collateral.

First Pacific said recurring profit grew 20 percent last year to $286.6 million. This was primarily boosted by the $205.3 million contribution of PLDT to the group.

First Pacific also owns Indonesia-based PT Indofood Sukses Makmur Tbk, a listed food manufacturer and distributor.

The company is presently chaired by Indonesian tycoon Anthoni Salim.

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