San Miguel confirms energy arm may raise $500-M in IPO

Reuters

Posted at Jul 12 2011 02:23 PM | Updated as of Jul 12 2011 11:15 PM

MANILA, Philippines - San Miguel Corp. said on Tuesday its power unit was seeking to raise $500 million via an initial public offering this year, with the company eyeing to participate in auctions of state power assets.

In a disclosure to the stock exchange, San Miguel confirmed a local newspaper report on Monday quoting San Miguel president Ramon Ang as saying the plan was for an offer size of $500 million for its energy unit.

San Miguel plans to list SMC Global Power Holdings Corp. within this year as the food-to-power group seeks more funds to increase its investments in infrastructure and energy projects.

It has invited Goldman Sachs Group Inc., UBS AG, and Standard Chartered Bank, and local investment banks ATR Kim Eng and SB Capital Corp., a unit of Security Bank, to manage the IPO.

San Miguel shares fell as much as 2.4% on Tuesday, in a broader market that was down 0.6%.

Alan Ortiz, president of SMC Global Power, told reporters the company plans to bid for the government's remaining power assets, including contracts to manage the output of two power facilities in the central provinces of Cebu and Leyte.

State agency PSALM is set to auction a contract for the 146-megawatt power plant complex in October and the 640 megawatt Leyte geothermal power facility.

"We're joining the bidding of all the remaining generating assets and contracted capacities," Ortiz said.

San Miguel is the largest power producer on the main Philippine island of Luzon, accounting for nearly 30% of installed capacity. It has plans to put up additional power capacity of 3,000 megawatt in five years.

It expects its energy business to become a major revenue contributor in at least a year, possibly outpacing its traditional food and drinks ventures.

San Miguel's power businesses turned in revenue of P16.3 billion in the first quarter, accounting for about 13% of the group's total.