The group of businessman Manuel V. Pangilinan struck a formidable alliance with tycoon George Ty that allowed it to take over majority control of Visayas’ leading power generation firm Global Business Power for $475 million while raising $171 million in fresh capital by taking in the Tys as a strategic investor.
Ty-led conglomerate GT Capital Holdings agreed to unload 56-percent of Global Power in favor of Beacon Electric Asset Holdings Inc.—a venture between First Pacific-led infrastructure holding firm Metro Pacific Investments Corp. (MPIC) and telecom crown jewel Philippine Long Distance Telephone Co. However, GT Capital will enter as a strategic investor in MPIC by acquiring a 15.6-percent stake, becoming the second-largest shareholder of MPIC, which will still be 55 percent-controlled by Pangilinan-led First Pacific.
“This new partnership with GT Capital strengthens the cash position of First Pacific and at the same time it strengthens MPIC’s capital base and its position as the leading infrastructure company in the Philippines,” said Pangilinan, First Pacific managing director and chief executive officer. “We intend to use the funds raised in the MPIC share sale to pay down our borrowings.”
The deal allowed the First Pacific group to scale up its power generation portfolio in the Philippines while improving, instead of deteriorating, its balance sheet.
Global Power is the leading electricity generator in the Visayas region with a total capacity of 852 megawatts (MW), including a 150-MW capacity that will come on-stream later this year and a planned development of a 670-MW critical coal-fired plant in La Union, Pangasinan.
For the Tys, this effectively traded its power generation asset into a direct stake in an infrastructure play like MPIC. “It’s a perfect fit, I think. What MPIC represents is new to GT Capital, so there’s no conflict. It increases the coverage of GT Capital and looks at the Philippine economy in a different perspective altogether,” said GT Capital co-vice chair Alfred Ty.
During MPIC’s stockholders’ meeting Friday, MPIC president Jose Ma. Lim said the company would sell 3.6 billion new shares to GT Capital at P6.10 a share for a total consideration of P21.96 billion. This will give GT Capital an initial 11.4 percent of the enlarged MPIC stocks. GT Capital will further acquire 1.3 billion MPIC shares from the First Pacific group at the same price, boosting its interest to 15.6 percent.