Conglomerate Phinma Corp. has boosted its bid to reenter the local cement space with a $50-million deal to invest in Song Lam Cement Joint Stock Corp., operator of the biggest state-of-the-art cement plant in Vietnam.
Phinma has invested in the preferred shares of Song Lam— which is part of Vietnam’s largest private-owned cement manufacturing group, Vissai—through its cement-making unit, Philcement Corp. (Philcement).
After a 14-year hiatus, the Phinma group returned to the cement business in 2018 to ride on the country’s projected infrastructure boom, reviving its old flagship brand “Union Cement” in a bid to rebuild a formidable market position.
“This investment in Song Lam will assure Philcement of a steady supply of quality cement that will support both the private and public sector’s ever-expanding infrastructure projects, notably those under the Philippine government’s Build, Build, Build Program,” Phinma president and CEO Ramon del Rosario Jr. said in a statement on Tuesday.
Philcement CEO Ed Sahagun added: “Phinma’s investment is a strong complement to our integrated business platform that will optimize Song Lam’s high-capacity port loading facilities on the Vietnam side and Philcement’s cement processing terminal in Mariveles, Bataan, on the Philippine side.”
The preferred shares will be entitled to receive annual, fixed cumulative dividends of 7.5 percent. They are convertible to common shares.
In a disclosure to the Philippine Stock Exchange, Phinma said that when combined with its “world-class cement processing facility in Mariveles, Bataan, Philcement will be able to unlock market opportunities and continue to provide high quality cement to its customers.”
Philcement is Phinma’s vehicle for its cement industry comeback and is envisioned to contribute significantly to the growing demand for reliable and quality cement and construction materials in the Philippines.
To date, the Philippines has an estimated annual demand of 32 million metric tons, driven by both the government’s mega infrastructure program, as well as private construction activity. With domestic production at an estimated 27 million metric tons, Phinma sees a supply gap that it could address.
“We complement local manufacturing to plug supply gaps, which can delay infrastructure development in the country as has happened in the past, by ensuring stable supply for the market,” said Sahagun.
Following this investment deal, Phinma will be entitled to nominate the chief financial officer of Song Lam, as well as one member of the board of directors.
Vissai group of Vietnam owns and operates five cement plants, including Song Lam Cement, which exports cement products to 37 countries including the Philippines.