‘Maharlika may invest as much as P8.5 billion in NGCP’

MANILA, Philippines — Maharlika Investment Corp. (MIC) may invest as much as P8.5 billion to secure at least a 10-percent stake in the entity that controls the National Grid Corp. of the Philippines (NGCP), according to an analyst.

Speculation has been swirling that MIC, which governs the Maharlika Investment Fund, is in talks with tycoons Henry Sy Jr. and Robert Coyiuto Jr. to grab a slice of NGCP through Synergy Grid & Development Philippines Inc.

SGP controls a 60 percent stake in NGCP, the privately owned corporation responsible for the operation, maintenance and development of the country’s power transmission network.

State Grid Corp. of China, meanwhile, holds the remaining shares.

Although no deal has been finalized yet, The STAR has learned that negotiations may wrap up as early as this month.

Assuming the Maharlika Fund acquires a 10-percent interest or around 526 million shares of SGP, Peter Garnace of Unicapital Inc. estimates that a “fair value” should range from P6 billion to P8.5 billion, or P12 to P16.10 per share.

“Based on previous equity transactions (that is) 2021 FOO (follow-on offering), SGP was priced at P12 apiece,” Garnace told The STAR.

Meanwhile, based on the company’s book value, it is valued at P20.13 per share as of September 2024. Hence, by applying a minority discount, we arrive at an adjusted fair value of P8.5 billion or P16.10 per share,” he explained.

Finance Secretary Ralph Recto, who also serves as MIC chairperson, earlier signified the sovereign wealth fund’s desire to secure at least one board seat in NGCP.

However, it is not clear if a 10-percent stake in SGP is enough to land a seat on the NGCP board.

According to Garnace, a significant stake such as 10 percent “usually comes with a board seat” but noted that the outcome still depends on the terms negotiated.

Currently, the NGCP board is chaired by Zhu Guangchao (Chinese), while Sy and Coyiuto serve as co-vice chairmen. Members include Jose Pardo, Francis Chua, Yao Yousheng (Chinese), Wang Lijin (Chinese), Anthony Almeda, Liu Xinhua (Chinese) and Paul Sagayo Jr.

The board of directors was elected based on the proportionate shareholding of SGP and State Grid.

Amid growing speculation over a potential share acquisition by MIC, Garnace said SGP shares have soared by as much as 35 percent since the start of the year.

“However, investors should carefully consider several factors when determining the company’s fair value, including the current regulatory landscape, earnings potential and dividend growth,” the analyst said.

“Recently, the grid operator has been under increased regulatory scrutiny due to power interruptions caused by delays in essential infrastructure development. Additionally, dilution could pose a risk to existing investors if the deal involves the issuance of primary shares,” he added.