KKR targets stake in Philippine power developer
KKR has offered to acquire up to 9% of First Gen Corporation, a power plant operator in the Philippines, for PHP7.29 billion ($144 million).
An investment entity under the private equity firm's infrastructure fund is willing to pay PHP22.50 per share through a tender offer, according to a filing. This represents a 26.83% premium over the May 22 closing price of PHP17.74. The stock closed at PHP20.15 on May 28, its highest level since the end of February.
KKR earlier acquired a 0.65% stake through open market trades; should the tender be accepted the holding would rise to 9.65%. First Gen had previously planned to expand its capital base but quarantine-related restrictions in the country meant the board meeting to discuss the move had to be postponed.
First Gen is a subsidiary of First Philippine Holdings (FPH), a conglomerate founded in 1961 with interests in power generation and distribution, manufacturing and property development. FPH, which owns 67.82% of the company, is also part of another conglomerate, the Lopez Group, which focuses on media, healthcare and financial services. First Gen listed on the Philippine Stock Exchange in 2006.
Founded in 1998, First Gen currently operates four natural gas-fired power plants and several power plants that produce electricity using hydroelectric and geothermal methods. It also has solar rooftop and wind energy projects and is developing a liquefied natural gas terminal in Batangas.
According to its latest quarterly report, First Gen has a total plant capacity of 3,492 megawatts across the various assets. Revenue came to $2.1 billion in the 2019 financial year, up 8.7% year-on-year. Over the same period, net profit increased by 29.6% to $414,228.
KKR, which invests across asset classes in the Philippines, has invested in Metro Pacific Hospitals, the country’s largest network of private hospitals, and Voyager Innovations, a financial technology company that operates PayMaya, a payments system for merchants and consumers. These are both private equity investments.
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