MVP group raises Meralco stake to 53.34%

Acquiring shares sold by San Miguel camp for P17B

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08:05 AM July 22nd, 2013

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The group of businessman Manuel V. Pangilinan (shown in photo) is working to acquire a majority stake in Manila Electric Co. by acquiring an additional 5-percent interest in the country’s biggest power distributor out of the block recently unloaded by San Miguel Corp. INQUIRER FILE PHOTO

MANILA, Philippines—The group of businessman Manuel V. Pangilinan is working to acquire a majority stake in Manila Electric Co. by acquiring an additional 5-percent interest in the country’s biggest power distributor out of the block recently unloaded by San Miguel Corp.

An initial 5.7-percent block in Meralco was sold last Friday by SMC at P270 a share or about P17.4 billion to various investors that included the MVP group. However, the MVP group’s goal was to buy an additional 5 percent out of SMC’s ongoing divestment, an Inquirer source said.

Computed against previous ownership levels, such a transaction will bring the combined direct and indirect stake of the MVP group in Meralco to 53.34 percent, breaching majority, while conglomerate San Miguel Corp.’s interest has been reduced to 27.1 percent.

Prior to this transaction, the MVP group, through Beacon Electric Asset Holdings Inc., held an indirect interest of 48.34 percent in Meralco as of end-June. But as the group votes as a bloc in alliance with the Lopez family, MVP has been exercising a controlling interest in the utility.

Beacon, a joint venture between Metro Pacific Investments Corp. and Philippine Long Distance Telephone Co. subsidiary PLDT Communications and Energy Ventures Inc., was created to hold the shares in Meralco that were mostly bought from the Lopezes, allowing Pangilinan’s group to consolidate investments in a sector believed to have a significant growth potential as the Philippine economy grows.

The source said most of the acquisition was made through Beacon and that this exercise would not trigger a tender offer requirement. But beyond the additional stake, the source from the MVP group said there was no plan to further increase its interest in Meralco.

Several sources familiar with the transaction also said the state-owned Government Service Insurance System had participated in last Friday’s placement, thereby acquiring additional shares in Meralco.

Industry sources said the pension fund wanted to come back as a passive investor in Meralco on more upbeat prospects on earnings and the management of the utility. Under the disclosure rules, changes in beneficial ownership not exceeding 5 percent of a listed company do not have to be disclosed immediately although these will eventually be reflected in the regular reporting on public ownership.

Prior to Friday’s placement, the GSIS held 628,590 shares in Meralco, based on the latest ownership report.

The GSIS, under the previous administration, was among those that had sold shares in 2009 that allowed SMC and its allies to come in at P90 a share. But since then, the GSIS, challenged by declining asset yields in a record-low interest rate environment, has again been loading up on equities as part of its trading portfolio.

Meanwhile, SMC said the sale of a portion of its stake in Meralco was made to take advantage of the current stock price of the power distributor, given the present volatility of the equities market.

In an e-mail to the Inquirer, SMC president Ramon Ang said the sale at P270 a share yielded hefty gains for the conglomerate, which acquired its Meralco stake at an average P90 a share. “We plan to reinvest the proceeds in higher yielding investments,” he said, pointing to SMC’s projects in the power and infrastructure sectors.

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