Metro Pacific Investments Corp (MPIC), the largest infrastructure investment management and holding company in the Philippines, has bought a 25 per cent stake in Beacon Electric Asset Holdings for $540.4 million (26.2 billion).
Beacon Electric is a special purpose company owned 50-50 by telco giant PLDT, and MPIC.
MPIC signed a sales and purchase agreement with PLDT Communications and Energy Ventures Inc (PCEV), a subsidiary of PLDT to that effect. PCEV is a 99 per cent subsidiary of mobile carrier Smart Communications Inc (Smart), a wholly-owned subsidiary of PLDT.
The fund generated from the sale of PCEV’s equity interest in Beacon Electric will be used by PLDT to pay a portion of its 50 per cent acquisition of the telco assets of diversified conglomerate San Miguel Corp (SMC) – a deal that was announced yesterday.
Beacon Electric holds a 35 per cent interest in Manila Electric Co (Meralco), the biggest electricity distributor in the Philippines, and 56 per cent of Global Business Power Corp (GBP), the leading power supplier in the Visayas region and a unit of local listed conglomerate GT Capital Holdings Inc.
MPIC’s acquisition of additional 25 per cent interest in Beacon Electric will increase its overall economic interest in Meralco to 41.2 per cent and Global Power to 42 per cent.
MPIC will pay P17 billion in cash on completion of the transaction and the balance of P9.2 billion in installments in the next four years.
However, PCEV’s interest in Meralco will be reduced to an effective interest of 8.7 per cent. PCEV is a holding company whose primary asset is its holding in Meralco, now held indirectly through Beacon.
There will be no change in the aggregate interest of MPIC, PCEV and Beacon in Meralco which remains at 49.96 per cent.
MPIC chief executive officer Jose Ma. K. Lim said the investment represents good value for MPIC in the light of the long-term growth outlook of the Philippine power sector.
“You will recall that last year we substantially reduced the leverage in Beacon. Meralco is now the single largest source of cash generation for MPIC and in undertaking this investment, we have enhanced our overall cash flow and further improved our growth prospects,” Lim said.
MPIC disclosed that it “formed a strategic alliance” with the GT Capital Group and has made an initial investment in Global Business Power Corp (GBP), the leading power generator in Visayas and a unit of GT Capital.
MPIC acquired a 56 per cent stake in GBP for over P22 billion, while GT Capital invested P21.96 billion in share subscriptions to MPIC for a 15.6 per cent ownership.