Singaporean fund investing P22B in Emperador

MANILA, Philippines—Andrew Tan has taken in Singapore’s sovereign wealth fund GIC as a strategic minority investor in beverage arm Emperador Inc., boosting the latter’s financial muscle as it heads toward globalization.

GIC is initially investing P17.6 billion in a mix of equity and securities that are convertible into shares at P11 per share. It also has an option to invest P4.4 billion more over the next 13 months at the same price of P11 per share, according to a disclosure to the Philippine Stock Exchange on Friday.

If the options to convert securities into shares and acquire additional shares in Emperador are exercised, the sovereign wealth fund will be able to acquire a total of 11.76 percent interest in the local beverage company.

The definitive agreement is expected to be completed within November 2014.

“The partnership with GIC will strengthen the capital position of the company to further enhance the leading industry position of Emperador in the country and expand its business in both local and global markets,” the company said.

The initial investment by GIC of P17.6 billion includes an equity investment of P12.32 billion for the outright purchase of 1.12 billion common shares representing a 6.95 percent direct stake. It also includes equity-linked securities worth P5.28 billion which have a term of up to seven years and convertible into 480 million common shares in Emperador. GIC’s equity ownership will expand further to 9.64 percent if the equity-linked securities are converted into common shares.

If GIC exercises its option to invest an additional amount of P4.4 billion, its stake in Emperador will further rise to 11.76 percent.

“We welcome the entry of GIC, a reputable world-class global fund manager, into Emperador. EMP has a strong capital position and the transaction is a partnership with a long-term and like-minded investor. The partnership enhances AGI’s track record of growing companies into market leaders through strong execution, brand building and product innovation,” Emperador chair Andrew Tan said.

UBS AG acted as financial adviser of Emperador in the transaction.

Emperador is a leading alcoholic beverage firm in the Philippines and the world’s biggest brandy producer. In 2013, it sold about 33 million cases of brandy, cornering close to 50 percent of total spirits volume in the Philippines.