MANILA, Philippines (UPDATE 2) - A company controlled by the son of Philippine mall tycoon Henry Sy will buy Monte Oro Grid Resources Corp., which has a 30% interest in transmission firm National Grid Corp. of the Philippines (NGCP).

OneTaipan Holdings Inc. will acquire 100% of Monte Oro for approximately $350 million. Funds for the acquisition will come from equity and debt arranged by a foreign financial institution.

"The investment represents our commitment to be a part of the power sector, which is a critical engine to the country's development and growth. NGCP's ability to provide a reliable and cost-effective transmission facility and services will directly redound to the benefit of various industries and the masses," said Henry Sy Jr. in a statement.

The deal will mark the first foray of Sy Jr., the eldest son and namesake of the country's richest man, into the energy sector. In 2007, a company he led, TriRatna Holdings Inc., was qualified to bid for NGCP, but did not join the formal auction.

The Sy family operates the largest mall network in the Philippines. The conglomerate is also into property, banking, tourism and businesses related to their cash-rich retail business. 

Privatizing transmission

The NGCP is owned by the consortium of Razon-led Monte Oro Resources and Energy Inc., Coyiuto-led Calaca High Power Corp, and the State Grid International Development Ltd, a subsidiary of State Grid Corp. of China. 

In January 2009, the consortium won the 25-year concession and franchise to operate the assets and business of the state-owned firm that monopolize the country's power transmission system.  

Talks of issues on control and financing among the consortium owners have been going on since the national grid was privatized. The consortium has to pay $3.95 billion purchase price to the Philippine government in tranches.

Monte Oro is associated with businessman Enrique Razon, a close friend of President Arroyo's husband. Razon heads International Container Terminal Services Inc., a port operator with businesses in 13 countries.

Cross ownership

Sy Jr. is said to be allied with San Miguel Corp. president Ramon Ang. In 2009, Sy's TriRatna Holdings made an offer for the Lopez family's 13% stake in the country's largest power distributor, Manila Electric Co. (Meralco), which San Miguel also partly owns.

Triratna's offer represented nearly a 60% premium over Meralco's market value at that time. It jacked up the purchase price of Metro Pacific Investment Corp., another Meralco shareholder, by at least P4 billion.

Had TriRatna succeeded in acquiring a stake in Meralco, it is barred by the Electric Power Industry Reform Act to own shares in NGCP. The EPIRA does not allow cross ownership between power transmission and distribution businesses.  With reports from Reuters; Liza Reyes, ABS-CBN News