Yuchengco Group may exit construction business

MANILA, Philippines — The Yuchengco Group may eventually exit the construction business and focus instead on its other core competencies, industry sources said.

It’s not clear yet when this could happen if and when it does, sources said, but they noted that this was largely the Yuchengco Group’s move to manage risks and instead concentrate its resources on other businesses namely banking, education, insurance, among others.

“YGC will eventually exit EEI,” a source said.

The country’s construction industry has been badly hit by the COVID-19 pandemic as some clients were unable to pay their obligations. It has yet to recover to pre-pandemic levels especially those projects developed by the private sector, dampened by slow demand, higher supply costs, and rising interest rates.

EEI was not spared from the negative impact of the pandemic even though it is one of the largest Philippine construction and general contracting firms with both domestic and international operations, from Asia to Saudi Arabia.

Over the past two months, the House of Investments, the listed holding company of the Yuchengco Group, has already been reducing its stake in EEI.

Last week, it sold a 14.36-percent interest to Industrial Holdings and Development Corp. of the Chua Group for P1.07 billion through the sale of 148.67 million common shares in EEI for P7.23 per piece, a 20.5-percent premium over the stock’s closing price on Friday.

IHDC is headed by Francis Chua, a construction engineer with business interests in construction supply including pre-cast concrete structures, cement and aggregates and investments in the logistics and real estate sectors.

In April, House of Investments reported plans to sell a 20-percent stake in EEI to House Speaker Martin Romualdez’s RYM Business Management Corp. for P1.25 billion.

The Yuchengco Group has also been strengthening its renewable energy business on the back of growing demand for cleaner power.

Yuchengco-held PetroEnergy Resources Corp.’s (PERC) renewable energy arm PetroGreen Energy Corp. (PGEC) has partnered with Denmark-based Copenhagen Energy (CE) to undertake various offshore wind power projects.

These projects are Buhawind Energy Northern Luzon, Buhawind Energy Northern Mindoro and Buhawind Energy East Panay.

At present, PGEC, established in 2010, operates at least five power stations using renewable energy or geothermal, wind and solar.

These include the 32-MW Maibarara geothermal power plant in Batangas, the 36-MW Nabas-1 wind project in Nabas and Malay, Aklan and the 70-MW Tarlac solar project in Tarlac City.