MPIC boosts Meralco stake, Infra conglomerate pursues Thai toll road project

MANILA, Philippines - Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) is increasing its exposure in its power unit while pursuing major railroad and toll road projects at a cost of almost P20 billion.

The conglomerate led by businessman Manuel V. Pangilinan is securing direct ownership in power distribution giant Manila Electric Co. (Meralco) while acquiring more shares in a Thai toll road project even as it invests in a railroad project.

In a regulatory filing, the company said Beacon Electric Asset Holdings Inc. will sell 56.35 million shares or roughly five percent of Meralco to MPIC at a price of P235 per share worth P13.24 billion. It represents a 7.11-percent discount to the closing price of P253 on June 23.

Beacon is a special purpose company jointly owned by MPIC and PLDT Communications and Energy Ventures (PCEV).

“The deepening of our investment in Meralco is reflective of our expectation of growth in this business, especially from much needed power generation in Luzon,” said MPIC CEO Jose Ma. K. Lim.

“MPIC retains its partnership with PCEV for holding most of our investment in Meralco while increasing committee participation in the business as a result of our direct holding,” Lim added.

MPIC will pay Beacon P3 billion immediately while the balance will be settled on or before February 2015.

Upon the transaction’s completion, MPIC will directly own five percent of Meralco. Through Beacon, it will own another 22.48 percent, increasing its effective interest in Meralco to 27.48 percent.

For its part, PCEV’s stake in Meralco will be reduced to 22.48 percent. Aggregate interest of MPIC and Beacon in Meralco will remain at 49.96 percent.

 â€œMPIC will receive a dividend from Beacon at the same time as it settles payments for this transaction such that MPIC’s net cash investment in the transaction will be P6.6 billion, which MPIC will fund from internal sources,” the conglomerate said.

Meralco, the country’s largest power producer, targets to build a power generation portfolio of up to 3,000 megawatts of fuel-efficient and reliable base load and mid-merit plants that will help assure adequate supply of cost-competitive power to customers.

MPIC said it is also investing P4.5 billion to increase its shares in Don Muang Tollway Public Co. Ltd (DMT) in Bangkok to 29.45 percent.

In November, Hong Kong-based parent firm First Pacific Co. Ltd. and MPIC formed a joint venture to acquire a 24.9-percent stake in the Thai tollroad operator for P5.8 billion.

MPIC said it also expects to invest up to P8.5 billion in equity and shareholder loans in a five-year program. It is in line with MPIC’s 55-percent interest in the Light Rail Manila consortium, which was the sole bidder for the government’s LRT-1 maintenance and track extension.

“MPIC’s aggregate cash investment in Meralco, DMT and the LRT 1 for these transactions will total some P19.6 billion albeit the LRT 1 investment is spread over a number of years,” Lim said.

“Through a combination of our previously announced hospitals group dilution/sell down, cash in hand and borrowings, we are able to fund these investments on our existing capital base,” he added.