SMC to unload banking, power generation business Conglomerate seeks more diversified investments

MANILA, Philippines - Conglomerate San Miguel Corp. (SMC) is far from over in its diversification process, its top executive said.

SMC plans to unload shares in its banking and power generation businesses to pursue projects like cement manufacturing, oil and gas investments and airport development, among others.

“We are still pursuing the diversification. Whenever there is a good opportunity to invest in something that will give a good return to SMC, we will pursue that,” said SMC president and chief operating officer Ramon S. Ang to reporters.

“We are 60 percent of where we want to be,” Ang said, adding that SMC expects to “accomplish something in the next couple of years.”

In 2007, the conglomerate started selling parts of key businesses to fund diversification from the mature food and beverage businesses into high-growth and capital-intensive sectors like power generation, mining, infrastructure and telecommunications.

To fund new ventures, the food-to-power conglomerate is set to sell shares in existing units.

For instance, Bank of Commerce has received offers from numerous local and foreign investors for an equity infusion.

“We have authorized shares that are not yet issued,” Ang said, adding that SMC is still studying an option to sell up to 40 percent of Bank of Commerce.

Late in June, SMC’s plan to sell subsidiary Bank of Commerce fell through as it failed to close the P12.2-billion transaction with buyer CIMB Group Holdings of Malaysia.

Its stake in power generation business SMC Global Power Corp. will also be trimmed this year.

“The 49 percent share in power will be sold before the end of the year. That is already sure,” Ang said.

Ang said SMC Global is in talks with several potential buyer, with SMC looking at an initial public offering (IPO) or a private equity deal to raise a minimum of $800 million.

SMC Global, which has a power generation capacity of 2,500 megawatts and an equity value of at least $1.5 billion, filed its listing plan to corporate regulators in 2011 but the IPO was deferred.

The use of the fundraising programs is still under study.

“If we raise money, the problem is where we will spend it,” Ang said.

Asked about an oil and gas investment, Ang said SMC is evaluating many opportunities.

The conglomerate earlier said it is investing $25 billion in a foreign oil and natural gas company.

Another new project for SMC is the development of an airport. The holding firm earlier said it would build a new 2,000-hectare international airport near Manila.

“The airport development dream is still being pursued,” Ang said, adding that timing is the only issue.

The conglomerate is also investing in the cement production business that will ensure healthy competition, Ang said.

“SMC is going to put up another two plants. One in Southern Luzon and another one in Visayas,” Ang said.

Ang said the intention is to reach a capacity of at least 10 million tons per year in the next two to three years.

In May, the diversified conglomerate injected P3 billion worth of fresh equity to acquire a 35 percent interest in Northern Cement Corp. of SMC chairman Eduardo “Danding” Cojuangco Jr.

To date, Northern Cement and Eagle Cement Corp. a personal investment of Ang, have a combined capacity of four million tons.