JG Summit plans to borrow P50-B for Meralco buy
MANILA - Philippine conglomerate JG Summit Holdings Inc plans to raise around P50 billion ($1.2 billion) via bank loans and debt issuance to finance its acquisition of 27 percent of Manila Electric Co, JG Summit President Lance Gokongwei said.
JG Summit has agreed to buy the stake in Meralco, the Philippines' largest power utility, from conglomerate San Miguel Corp for about $1.65 billion, in what would be the country's biggest acquisition in nearly two years.
JG Summit is entering the electricity generation and distribution business to benefit from a rise in power demand in one of Asia's fastest-growing economies. For its part, San Miguel is raising funds for other infrastructure ventures.
"Our plan was to borrow two thirds, then equity one third," Gokongwei told reporters on the sidelines of an industry event on Tuesday. "We have more than sufficient cash to fund the equity side."
He declined to elaborate on the borrowing plan.
JG Summit recently raised $280 million by selling shares of food unit Universal Robina Corp to help finance the Meralco buy.
The acquisition would be JG Summit's first in the power sector, adding to its portfolio of businesses spanning food and drink, banking, real estate, airlines and petrochemicals.
"(Meralco) will be our main investment in the power sector," Gokongwei said. "It's got a very dominant distribution business and it has the potential for growth through its investments in generation."
JG Summit was founded by Gokongwei's father John Gokongwei Jr., the Philippines' fifth-richest person with a fortune of more than $3 billion, according to Forbes magazine.
Among other interests, JG Summit plans to bid for a $430 million project to build an airport in central Cebu province.