SMC studies fund raising options for its power unit

MANILA, Philippines - San Miguel Corp. (SMC) is studying fund-raising options for its power generation arm, SMC Global Power Holdings Corp., SMC president Ramon Ang said.

Options include embarking on an initial public offering (IPO) or doing an equity sale to an interested investor.  

“Actually, we are very flexible. Someone wants to buy 49 percent, or another choice is to place out the 49 percent to the public,” Ang said.

However, SMC told the Philippine Stock Exchange that the conglomerate was shelving its plan to list SMC Global in the local bourse.

Nonetheless, Ang said the options are still being studied and carefully evaluated.

“Because if we put it out to the public it will fetch a lower price,” Ang said.

In 2011, SMC Global had planned to go on an IPO, but until now the plan has yet to push through.

Last July, SMC Global already broke ground for its 600-megawatt coal-fired power plant in Davao.

Ang said that the company is on track to complete the plant in 2015.

The power plant to be built in Malita, Davao, would help balance the power supply differential between north and south Mindanao and provide reliable and continuous supply of electricity at a lower cost, the company earlier announced.

The plant aims to help address the growing power crisis in the island which is currently facing shortages of up to 10 hours, depending on the area. The nearby Visayas region is also facing shortages.

“As demand in both regions are expected to grow, SMC Global Power is looking to help close the gap,” Ang said in a disclosure last July.

The power plant, which is the fourth in the company’s portfolio, is the first plant in the region. It would have an initial capacity of 150 MW and may be upgraded to its full capacity of 600 MW.

SMC Global said the plant would use locally sourced coal from SMC-owned mines in Mindanao.

SMC Global is investing $1.5 billion for the construction of its two new power plants – the Mindanao plant and a 600 MW plant in Bataan.

In just four years, SMC Global Power has become one of the largest independent power generation companies in the country, with an installed capacity of 2,545 MW, the company said in its disclosure.

As of 2012, it already cornered a 17 percent market share of the power supply of the national grid and 23 percent share of the Luzon grid.