US-based KKR raises stake in First Gen via P8.68-B tender offer deal

New York-based private equity group KKR on Wednesday said it had accepted close to 263 million shares in First Gen Corp., representing a 7.3-percent stake in the Lopez-led firm, which it would acquire for P8.68 billion through a Philippine subsidiary.

This is higher than what Philippine Clean Energy Holding Inc. (PCEHI) had planned to buy when it first announced a voluntary tender offer. It originally sought a 5.7-percent interest, or 205 million shares at P33 apiece for a total of P6.76 billion.

KKR said in a statement PCEHI intended to acquire on Oct. 8 all of the common shares tendered by existing shareholders through a block sale.

Once completed, KKR’s ownership stake in First Gen would rise to 19.9 percent.

Supporting renewable energy

In June 2020, another KKR unit, Valorous Asia Holdings Pte. Ltd., acquired about 407 million common shares in First Gen at P22.50 apiece for a total of P9.6 billion.

“After having been invested in First Gen for this past year, our admiration for First Gen’s business and strategy—including its work to support the energy transition in the Philippines—as well as its board and management team has only increased,” said Michael de Guzman, managing director of KKR’s infrastructure group.

“Today, we are pleased to have this opportunity to extend our shareholding in First Gen and support its work to provide critical energy solutions to millions of Filipinos across the country,” said de Guzman, who is based in Hong Kong.

A subsidiary of First Philippine Holdings Corp., First Gen generates electricity mainly through renewable energy and indigenous fuel sources such as natural gas, geothermal energy from steam, hydro, wind and solar power.

3,495-MW capacity

First Gen has in its portfolio 3,495 megawatts of installed capacity, which accounts for about one-fifth of the Philippines’ power generation.

One of First Gen’s major ongoing projects is the construction of a liquefied natural gas (LNG) terminal at the First Gen Clean Energy Complex in Batangas City.

A joint venture with Tokyo Gas Corp., the LNG terminal is expected to start operations in 2022, with an initial phase that features an interim floating storage regasification unit. The facility will eventually have a permanent onshore regasification plant.

Further, de Guzman said the latest transaction with First Gen shareholders, made through KKR’s Asia-Pacific Infrastructure Fund, deepened the global investment firm’s commitment to the Philippine market.

According to KKR, its latest investment in First Gen extends their track record as an active investor in the region across asset classes.

In the Philippines, KKR has also made investments in independent telecommunications tower firm Pinnacle Towers, Metro Pacific Hospitals and tech firm Voyager Innovations.