GT Capital war chest to fund MPIC stake

MANILA, Philippines — GT Capital Holdings Inc. (GT Capital), the conglomerate of the Ty Group, will use its war chest to fund its acquisition of a higher stake in Pangilinan-led Metro Pacific Investments Corp. (MPIC) instead of borrowing from external sources.

“It will be funded internally,” said a ranking GT Capital insider.

The company will pour in $70 million or P3.8 billion to raise its stake to a maximum of 20 percent from the existing 17.1 percent for roughly $70 million or P3.8 billion.

This will bring GT Capital’s stake equal to the 20 percent stake to be acquired by incoming investor Japanese giant Mitsui & Co. Ltd, together with its partner, another Japanese partner JOIN, as they make a bigger bet on the Philippine infrastructure business.

MPIC’s other main shareholder, Hong Kong-based First Pacific Company Limited, a management investment group led by Pangilinan, GT Capital and Mitsui will launch a P49-billion tender offer to buy out 10.5 billion shares held by the public at P4.63 per share to take MPIC private.

The price, although deemed low by stock market investors, is at a 22 percent premium over its average stock price for the past year and has been determined by a third party valuation provider.

The tender offer, which comes 17 years after MPIC listed on the Philippine Stock Exchange in 2006, will commence late May up to late June.

Under the tender offer, First Pacific, through its Philippine affiliate Metro Pacific Holdings Inc. would spend approximately $90 million or roughly P5 billion to increase its stake in MPIC to 49.8 percent from 46.1 percent at present or by 3.8 percent.

GT Capital CFO Francisco Suarez Jr., for his part, said a higher stake in MPIC further diversifies GT Capital’s core portfolio.

Mitsui, meanwhile, hopes to hitch a ride on a potential infrastructure boom in the country, which for decades has lagged behind its Southeast Asian peers in terms of roads, bridges, and other big-ticket structures.

It formed Mit-Pacific Infrastructure Holdings Corp. (Mit-Pacific), a joint venture with Japan Overseas Infrastructure Investment Corp. for Transport & Urban Development or JOIN to buy up to 20 percent of MPIC under the tender offer, becoming a shareholder for the first time in a new strategic initiative.

In its medium term management plan for 2026, which Mitsui disclosed recently, the company expects the start of profit contribution from its MPIC investments to come in during the fiscal year ending March 2024.

MPIC’s business include 47.5 percent of Manila Electric Company (Meralco), the biggest electricity distributor in the Philippines and one of the country’s largest electricity producers; 99.9 percent of Metro Pacific Tollways Corp., the largest toll road developer and operator in the Philippines; 52.8 percent of Maynilad Water Services Inc.; and 20 percent of Metro Pacific Health Corp.