Tycoon Federico “Piki” Lopez told InsiderPH the group is open to opportunities to delist First Gen Corp. amid a broader group strategy to keep a more focused public footprint.
“If the opportunity is there, why not,” Lopez said in a recent interview.
“But it’s not something we’re rushing to do,” he added.
First Gen is controlled by the Lopez family, followed by global investment group KKR, which holds nearly 20 percent economic interest in the industry giant.
Big picture
Like many other stocks, First Gen is struggling with share price performance, down nearly 5 percent over the past 12 months.
The stock has bounced from its recent 52-week low of P15.02 per share and is now trading at P16.22 each.
It also maintains a relatively small public ownership level of 11.7 percent, just above the 10 percent requirement, and a market value of about P59 billion.
Staying focused
Should First Gen pursue delisting, it would mark the family’s second privatization in its power portfolio after geothermal giant Energy Development Corp., which they took private in 2018.
“There’s too many listed vehicles. We always wanted to make it a little more focused. That’s why we delisted EDC,” said Lopez, who belongs to the family’s third generation.
Apart from First Gen, he is the CEO of publicly traded firms First Philippine Holdings and Lopez Holdings. Lopez is the vice chair of Rockwell Land Corp. and a director of ABS-CBN Corp., led by his cousin Carlo L. Katigbak.
The group’s five listed firms have a combined market capitalization of about P120 billion, with First Gen being the most valuable in terms of market price.
Stock price a concern
An industry insider who had advised the family said they’re open to going private “because they’re not seeing the value.”
“After the Razon deal, they have extra cash and their stock price isn’t really moving. From their perspective, it’s attractive,” the insider said.
But the insider noted there was pushback on delisting since this would be yet another high-profile exit from the Philippine Stock Exchange.
InsiderPH earlier reported that another business group was considering taking a business private amid weak market conditions.
Deal expert’s view
Delistings are an important mechanism for firms to enter and exit the market in an orderly way.
China Bank Capital managing director Juan Paolo Colet told InsiderPH this could also function as a means of returning value to shareholders when the stock price is battered.
Solid profitability
It maintains solid profit prospects, with net income rising 3 percent to P12.1 billion in the first nine months while revenues slipped 3 percent to P102 billion.
The sale of 60 percent of the gas business to Razon’s Prime Infrastructure Capital was only completed early this month, leaving First Gen with a minority stake in the massive operation.
In terms of price-to-earnings (P/E) ratio it is priced far below its peers at 2.6 times forecasted earning, versus 9.5 times for Aboitiz Power and 13.2 times for ACEN, data from Bloomberg showed.
This ratio measures a company’s stock price against profitability. It helps investors judge whether a stock is cheap, fairly valued, or expensive.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
