Tycoon Andrew Tan has taken in Singapore’s sovereign wealth fund GIC Private Ltd. as a strategic minority investor in beverage arm Emperador Inc., boosting the latter’s financial muscle in its roadmap toward globalization.
Making one of the biggest investments in Southeast Asia, GIC has infused an initial P17.6 billion in a mix of equity and securities that are convertible into stocks at P11 a share. GIC also acquired an option to invest an additional P4.4 billion over the next 13 months at the same price per share of P11, based on a disclosure to the Philippine Stock Exchange Friday.
Screengrab from www.emperadorbrandy.com
If the options to convert securities into shares and invest more in Emperador are exercised, the sovereign wealth fund will be able to acquire a total of 11.76-percent interest in the beverage firm.
The definitive agreement is expected to be completed within this November.
“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.
The partnership with GIC is seen strengthening the capital position of Emperador to further enhance its market leadership in the country and expand its business in both the local and global markets. Emperador recently sealed a £430-million deal to take over iconic Scottish scotch whisky-maker Whyte & Mackay. The group has likewise acquired vineyards in Spain.
The initial investment by GIC in Emperador includes an equity investment of P12.32 billion for the purchase of 1.12 billion common shares representing a 6.95-percent direct equity stake in Emperador. Apart from this, GIC obtained 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 in Emperador 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 ownership will further rise to 11.76 percent.
Lauro Baja, head of the Philippine unit of UBS, which arranged the transaction, said it was a “landmark” deal for the Philippines as it brought one of the single-biggest foreign investments in the country. “To have a world class investor like GIC buy at a premium to the market price is a great testament to (Andrew Tan’s) vision for Emperador both in the local and international markets,” he said.
“Moreover, the price transacted was a rare premium to the overnight closing price, again attesting to the long-term value that GIC sees in this strategic investment,” Baja said.
Prior to the deal, GIC has invested in a few large Philippine corporations: Bank of the Philippine Islands, Century Pacific Food group and Metro Pacific’s hospital group.
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. The company’s operations are fully integrated, including manufacturing, bottling and distribution. Its most successful product is Emperador Light, which has recorded a compounded annual growth rate of 53 percent since its launch in 2010.