Meralco takes control of solar firm for P16 billion

MANILA, Philippines — Manila Electric Co. (Meralco) is bolstering its power generation business as it is poised to take majority ownership of SP New Energy Corp. (SPNEC).

MGen Renewable Energy Inc. (MGreen), the renewable energy development arm of Meralco Powergen Corp. (MGen), will invest P15.9 billion in SPNEC to subscribe to 15.7 billion common shares and 19.4 billion redeemable preferred voting shares of SPNEC.

MGreen’s common and preferred voting shares will make it the controlling shareholder of SPNEC with a total voting interest of 50.5 percent upon closing of the transaction.

SPNEC will file its application for an increase in authorized capital stock to enable the investment.

MGreen’s fresh capital infusion will fund the construction and expansion of SPNEC’s solar projects.

SPNEC is a publicly listed integrated developer, owner and operator of solar power projects.

It is currently majority owned by Solar Philippines Power Project Holdings Inc. (SPH).

MGen, on the other hand, is a wholly owned subsidiary of Meralco, the country’s largest private sector electric distribution utility company.

Meralco said MGreen has agreed with SPH to use SPNEC as the primary vehicle to develop 3,500 megawatts of solar panels and 4,000 megawatt-hours of battery energy storage systems in Luzon.

“This will be one of the largest solar projects not just in Asia, but in the world,” Meralco chairman and CEO Manuel V. Pangilinan said.

“The Department of Energy’s vision is to have about 35 percent of the country’s energy come from renewable energy, and this is one of Meralco’s major contributions to this goal,” Pangilinan said.

MGen, through MGreen, has initially set its sights on reaching 1,500 MW of renewable energy capacity by 2030.

The company has committed to investing at least P18 billion to put up over two gigawatts of gross renewable energy capacity from solar and wind, which the company will build through 2030 along with its various partners.

SPNEC chief executive officer Leandro Leviste, for his part, said the company looks forward to bringing together Meralco’s capabilities and its solar developments for the benefit of all stakeholders.

“We are humbled and grateful for this opportunity to build this renewable energy platform with Meralco,” Leviste said.

Completion of the transaction is subject to the satisfaction of certain precedent conditions, including the relevant regulatory approvals.

UBS acted as financial adviser, while SyCip Salazar Hernandez and Gatmaitan and Gulapa Law acted as legal advisers to both Meralco and MGreen. King & Spalding and Picazo Law, on the other hand, acted as legal advisers to SPH and SPNEC.

MGen and wholly owned Global Business Power Corp.’s power generation portfolio is expected to end the year with a total gross capacity of 2,470 MW.

Its total gross capacity is expected to grow to 8,397 MW by 2027, with attributable renewable energy at 2,236 MW.

The share of renewables in its capacity mix is eyed to expand significantly from 9.6 percent this year to 59.1 percent by 2027.