SMC to take new investors in banking, power
MANILA, Philippines—Conglomerate San Miguel Corp. plans to take in new strategic investors for its banking and power-generation units as it pursues a diversification program that includes forays into infrastructure and heavy industry.
SMC expects to gain a controlling stake in the local cement manufacturing firm, Northern Cement Corp. this year, and intends to build a cement manufacturing capacity of 10 million tons a year in the next two to three years, company president Ramon S. Ang told reporters after the stockholders meeting on Thursday of subsidiary San Miguel Brewery.
SMC is also keen to pursue its “dream airport” project that it envisions as an alternative international gateway to the heavily congested Ninoy Aquino International Airport.
For the banking business, Ang said that after the collapse of discussions with the Malaysian banking giant CIMB, SMC had received a lot of offers from other parties—a mix of local and foreign investors— wanting to invest in the SMC-affiliated Bank of Commerce.
While the bank is in no hurry to build up capital for now, Ang said, there is a plan under consideration for Bank of Commerce to issue new shares that will give 40 percent control to a new investor. Proceeds will be used to recapitalize the bank.
For power generation unit SMC Global Power, Ang said the conglomerate was “sure” to be able to sell a 49 percent stake before the end of the year, a deal that could be worth at least $800 million.
“We have received numerous offers,” he said. Asked whether this would be through an international public offering or a private placement transaction, Ang said it would be done in the most “efficient” way possible.
Ang said that after staking a 35 percent interest in Northern Cement, SMC “[hopes] to gain majority within the year.” Northern Cement has a production plant in Pangasinan with a two-million ton per year capacity.
“SMC is going to put up another two plants, one in Southern Luzon and one in Visayas,” he said. One plant will be sited in Quezon province and the other most likely in Cebu.
The combined capacity of Northern Cement and Eagle Cement, another cement plant owned by Ang in his personal capacity, is four million tons a year. Both plants are doubling capacity to seven to eight million tons per year.
“The reason why we’re investing is there’s no other cement plant put up in this country since 1997 except for Eagle. So I think it’s very timely that we put up some capacity,” he said.
Meanwhile, the airport project which the SMC wants to propose to the government as an unsolicited proposal under the public-private partnership framework is still on the horizon.
“It’s still 100 percent pushing through. It’s just a matter of timing,” Ang said, adding that the project was being supported by President Aquino himself.