GIC invests $391m in Philippines liquor producer Emperador

This is the Singapore sovereign wealth fund's third direct investment in the Philippines this year, following commitments to Metro Pacific Investments' hospital business and canned tuna producer Century Canning Corporation.

GIC will acquire 1.12 billion shares in EMP - representing a 6.95% stake in the business - at PHP11 apiece, for a total consideration of PHP12.32 billion. It will then pay PHP5.28 billion for equity-linked securities with a seven-year term, which if fully converted, will take GIC's holding to 9.64%. In addition, the sovereign fund has the option to invest a further PHP4.4 billion, taking its interest in EMP to 11.76%.

"EMP has a strong capital position and the transaction is a partnership with a long-term and like-minded investor. The partnership enhances AGI's track record of growing companies into market leaders through strong execution, brand building and product innovation," Tan, who serves as chairman of EMP, said in a statement.

EMP is the largest spirits company in the Philippines and the world's biggest brandy producer. In 2013, it sold approximately 33 million cases of brandy, cornering close to 50% of total spirits volume in the Philippines. The company's most successful brand is Emperador Light. It recently acquired Whyte & Mackay, the world's fifth-largest Scotch whisky producer, from India's United Spirits for PHP31 billion.

Net income for 2013 came to PHP5.8 billion, up from PHP4.99 billion the previous year. Gross revenue rose from PHP23.6 billion to PHP29.9 billion over the same period.

Alliance Global has business interests covering real estate, tourism, entertainment and gaming, and quick service restaurants, in addition to EMP. Its biggest asset is Megaworld, the leading residential property developer and owner of business process outsourcing (BPO) space in the Philippines.

Foreign direct investment (FDI) has been low by regional standards, averaging about $2 billion between 2008 and 2012. However, the decision by Standard & Poor's and Fitch Ratings last year to raise their long-term credit ratings for the Philippines to investment grade, has turned the situation on its head. FDI reached $3.8 billion in 2013 and then $3.6 billion for the first six months of 2014 alone.

Private equity activity has also been climbing. Investment reached a record $572.1 million in 2013, largely on the back of CVC Capital Partners' buyout of BPO company SPi Global (although the record only stands if Ashmore's 2008 acquisition of oil refiner Petron from Saudi Arabia's Aramco is excluded.) The momentum has continued into 2014, with $476.4 million deployed prior to the latest GIC deal.

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• Topics
• PIPEs
• Consumer
• Southeast Asia
• PIPE
• Consumer
• Southeast Asia
• Philippines
• GIC Private