San Miguel power arm shelves IPO
MANILA - Philippine conglomerate San Miguel Corp's power generation arm has shelved a planned initial public offer and will instead raise $700 million from the debt market for expansion, senior company officials said on Wednesday.
SMC Global Power Holdings Corp, the country's biggest power producer, accounting for about a fifth of the Philippines' total supply, is seeking funding for two new power facilities with a combined generation capacity of 600 megawatts.
"It's easier to raise money through borrowing," said Ferdinand Constantino, San Miguel's chief financial officer, in an interview at the conglomerate's headquarters.
Volatility in financial markets, with the local stock market nearly erasing this year's gains before recovering in recent days to climb about 7 percent this year has made it difficult for SMC Global to pursue its planned share sale.
San Miguel President Ramon Ang said the group was unlikely to go to the equity market for any fundraising for the rest of the year, adding a plan to sell more shares in San Miguel Pure Foods Co Inc was possible next year.
San Miguel was previously looking to raise as much as $700 million from a planned listing of SMC Global, which the group values at about $1.1 billion, before the end of this year.
SMC Global will build two 300 MW coal-fed plants in southern Davao province and northern Bataan province, with total project cost of $1.1 billion to $1.2 billion, Constantino said.
About 30 percent of funding for the projects will come from equity and the balance from debt, he said, without giving further details. The two projects will increase SMC Global's total installed capacity to 3,145 MW and are part of its long-term plan to boost capacity by an additional 3,000 MW.
San Miguel, which owns 27 percent of Manila Electric Co (Meralco), has no immediate plans of selling more shares in the country's biggest power utility, Ang said.
In July, San Miguel sold a 5.7 percent stake in Meralco, raising $400 million for expansion plans.