According to officials with direct knowledge of the transaction, the deal grants the Maharlika Fund — led by former investment banker Joel Consing — two board seats in both the listed Synergry Grid and Development holding firm and directly in NGCP.
The source said this accords the government a “rare level of influence given its stake” while giving the fund an effective yield of 6.5 percent — 50 basis points higher than the average interest rate of government securities.
Through voting preferred shares that will eventually be convertible to common shares, the Maharlika Fund will own a 20-percent of the board in Synergy Grid giving it two of nine board seats — a representation level of 22 percent.
In NGCP, meanwhile, the government will have two of 10 board members (20 percent of the board headcount) pre-stake conversion.
If the preferred shares are converted to common shares, the government will have two of 15 board members on NGCP’s board — a representation level of 13 percent.
The source explained that this level of board representation gives the state more board seats than what its pre-share conversion stake of 8 percent and post-conversion stake of 5 percent would normally grant it.
While the arrangement is unusual, it demonstrates the strategic importance of the investment for the Maharlika Fund, the source said.
The combined value of the deal, including the additional investment will be required should the government opt to convert its shares from voting preferred to voting common in three years, will amount to P30 billion.
The fund’s entry price of P15 per voting preferred share represents a substantial discount to book value, offering it a yield premium over government securities with superior voting rights.
This valuation is particularly attractive for a stake in a critical public utility, providing substantial upside potential, the official explained.
Additionally, the P22.50 conversion price also gives Maharlika a big advantage, as it reflects current book value with significant potential for appreciation over the three-year conversion period.
Industry experts note that transmission rates have declined over the years and, given the right regulatory and political conditions, the firm’s intrinsic value could see substantial growth post-conversion.
Overall, the deal positions the Maharlika favorably in the utility sector, securing strong financial returns while gaining strategic influence in assets vital to the country’s power transmission network, the source explained.
