San Miguel eyes brewery in Asia’s ‘final frontier’

Conglomerate San Miguel Corp. is renewing its interest to expand its flagship beer operations to Myanmar amid strengthening bilateral ties between the Philippines and what has been called the region’s “final frontier.”

San Miguel president Ramon S. Ang told the Inquirer in an interview Friday that San Miguel Brewery Inc., which already corners about 90 percent of the local beer market, was considering investing in Myanmar, one of the region’s fastest growing markets for the alcoholic beverage.

“We will pursue Myanmar for beer,” Ang said. “If given the opportunity to get a license, it should be a good investment for beer manufacturing.”

Ang, who said San Miguel has been approached by “several groups” for other investment proposals, added that the conglomerate was open to exploring infrastructure deals like power and transportation.

“In some cases, it’s strategic. Some companies are already dominant in the Philippines, so they are also looking for opportunities elsewhere,” said Eduardo Francisco, president of BDO Capital and Investment Corp.

San Miguel, which is also involved in food, power generation, oil refining and toll roads, would be facing stiff competition as global brewers like Heineken and Carlsberg already announced expansion plans for Myanmar.

Such deals would not have been possible a few years ago. But Mynmar, also known as Burma, has been opening up under the leadership of its reform-minded President, Thein Sein, after almost half a century of military rule and global isolation.

San Miguel Brewery, which began operations in 1890, is partly owned by Japan’s Kirin Holdings Co., which has a 48-percent stake. The rest is held by San Miguel.

The Philippine brewer’s potential expansion to Myanmar would add to its sizeable assets overseas, which include breweries in Indonesia, Vietnam, Thailand and Hong Kong, and two facilities in China.

Closing a deal in Myanmar would also be San Miguel’s next major overseas investment after it sealed a deal in 2011 to buy ExxonMobil’s Malaysian assets for $610 million.

Cross border investing is not new, and other local conglomerates have been looking beyond the Philippines for opportunities to cash in on attractive returns.

Ayala Corp. and Hong Kong-based First Pacific Co. Ltd., led by businessman Manuel V. Pangilinan, have previously executed regional deals and continue to look for new investments, including those in Myanmar.

The purpose was partly to diversify their asset base or even minimize the risk given the sometimes uncertain regulatory environment in the Philippines, said a banker who requested anonymity.

San Miguel, meanwhile, bolstered its investment war chest recently, having agreed to sell its remaining 27-percent stake in Manila Electric Co. to the Gokongwei family’s JG Summit Holdings for P72 billion last September. In July, the conglomerate also raised P17.5 billion after selling a 5.7-percent Meralco stake in the open market.