The group of businessman Manuel V. Pangilinan is acquiring a minority stake in a Thai company operating a toll road in Bangkok in line with a regional push that could involve investments in other countries, a regulatory filing showed Friday.
According to a joint statement, Pangilinan-led First Pacific Co. Ltd. and its Philippine-listed infrastructure arm Metro Pacific Investments Corp. formed FPM Infrastructure Holdings Ltd., which will invest $132 million, or P5.8 billion, for a 29.45-percent stake in Don Muang Tollway Public Co. Ltd.
Don Muang Tollway operates a 21.9-kilometer six-lane elevated toll road stretching from Din Daeng in central Bangkok past Don Muang Airport and on to the National Monument in the north of the capital. The company’s concession ends in 2034, the filing showed.
“We are seeing more opportunities outside the infrastructure market of the Philippines,” Pangilinan, managing director and CEO of First Pacific and chair of Metro Pacific, said in the statement.
“We welcome the prospect of diversifying our investments as we continue to seek strong and steady returns for our shareholders,” Pangilinan added, noting that they were keen to invest further in telecommunications as well as the consumer and food sectors in the region. On Thursday, First Pacific announced that it acquired an initial 31-percent stake in Roxas Holdings, one of the Philippines’s biggest sugar producers.
First Pacific, which is based in Hong Kong and controlled by Indonesia’s Salim family, will own 75 percent of the new venture while Metro Pacific will own the rest, according to the statement. The deal would be Metro Pacific’s first direct investment overseas.
For the Don Muang Tollway venture, First Pacific will finance $100 million, or P4.4 billion, while Metro Pacific will use internal cash to fund its share of P1.4 billion.
Based on the statement, traffic on the toll road has risen 10 percent in the year since budget airlines began relocating to the airport in October 2012. In the first nine months of 2013 traffic averaged 77,000 vehicles a day on the original toll road.
“Further growth is seen as a result of population and economic growth in Bangkok and the full reopening of Don Muang Airport’s Terminal 2 in 2016 as budget airlines continue relocating there,” the statement showed.
Pangilinan noted that the toll road’s steady and growing profitability as a key attraction for First Pacific.
“This company has been paying dividends for the past four years and we are pleased to see that our investment will begin immediately delivering dividends to us,” Pangilinan said, noting that First Pacific will get an attributable economic interest of 26.2 percent. “We expect strong and steady growth from this investment going forward.”
The vendor of the toll road stake is a 50-50 joint venture between Bank of Tokyo-Mitsubishi UFJ and South East Asian Strategic Assets Fund. Other major DMT shareholders include the Phanichewa Group with 37.1 percent and Thailand’s Ministry of Finance with 25.1 percent.
The deal is First Pacific’s first investment in the country since selling its stake in Thailand’s Berli Jucker Public Co. Ltd. in 2001.