SMIC takes over Tiwi, Mak-Ban steam fields in P15.73-B deal

SM Investments Corp. (SMIC) | INQUIRER.net

SM Investments Corp. (SMIC) has acquired 81 percent of Allfirst Equity Holdings Inc. for P15.73 billion, thus gaining full ownership of the operator of the Tiwi and Mak-Ban steam fields in Albay.

In a regulatory filing, SMIC said it has bought out its partners in Allfirst in exchange for shares, which are still subject to valuation confirmation.

Allfirst is the holding company of Philippine Geothermal Production Company, Inc. (PGPC), which operates the geothermal steam fields. Tiwi is the first commercial-scale steam field development in Southeast Asia, followed by Mak-Ban.

Combined, the two fields could generate enough geothermal steam to produce 300 megawatts of electricity. Both have been in operation since 1979.

Sustainability advocate

“As a leading sustainability advocate, SMIC is pleased to invest directly in clean renewable energy-related production, which is a national priority and aligned with our commitments to environmental stewardship and to tackling climate change,” SMIC president and CEO Frederic DyBuncio said.

“The terms of this transaction will additionally create value for our minority shareholders and ensure alignment of the interests of all shareholders in the geothermal property. PGPC is expected to generate significant carbon offsets reported under the Task Force on Climate-Related Financial Disclosures framework,” he added. The latter refers to standards that companies use in reporting climate-related financial risks.

Aside from the two steam fields, PGPC also has several other greenfield concession areas in geothermal steam production which, according to SMIC, it would develop moving forward.

SMIC said the Allfirst deal, slated to be completed in the third quarter of 2022, would be structured as a share swap transaction based on a P26.6-billion enterprise valuation of PGPC.

The valuation is based only on the cash flow of the existing geothermal steam fields and does not credit any value to the other concession areas in PGPC’s portfolio that are currently in the development stage.

This would result in the issuance of 17.4 million SMIC shares based on a 60-day volume-weighted average price of P903.88 a share.

SMIC is currently the country’s most valuable conglomerate with businesses in retail, banking, and property. SM’s retail operations are the largest and most diversified while its property arm, SM Prime Holdings, Inc., is the largest integrated property developer in the country.

SM’s interests in banking are in BDO Unibank, Inc., the country’s largest bank, and China Banking Corporation, the sixth-largest.

Across its business segments, SMIC has been investing in renewables to make its operations more sustainable.

SM Prime aims to increase its use of renewable energy sources to more than 50 percent this year, with eight of its constructed malls already using solar roof decks to support electricity requirements.

Meanwhile, BDO was the first in the country and in the East Asia Pacific to offer green bonds.