Through Prime Infrastructure Capital, Razon is bolstering his aggressively expanding utilities business, which already controls Manila Water and the Malampaya gas field, the country’s largest and only operational deep water natural gas project, supplying about 20 percent of Luzon’s electricity needs.
Razon, who also owns International Container Terminal Services Inc. and Solaire casinos operator Bloomberry Resorts, was listed last April as the country’s second-richest individual with a net worth of $10.9 billion.
Lopez stocks soar
Shares of First Gen surged as much as 33 percent on Monday after a temporary trading halt was lifted.
It’s currently trading at P20 per share, up about 21 percent, while parent firm First Philippine Holdings gained as much as 7.6 percent.
The two companies are led by tycoon Federico R. Lopez.
Deal expert’s perspective
“This is a game-changer for Prime Infra as it will transform the company into the leading natural gas power producer in the Philippines. The deal is very strategic because Prime Infra already has an investment in Malampaya. This will be a major competitor to the LNG partnership of Aboitiz, Meralco, and San Miguel,” Juan Paolo Colet, managing director at China Bank Capital, said in a text message.
“The move is a positive development for the country as it will spur more investment in our energy sector,” he added.
Key deal details
• Prime Infra will acquire shares from First Gen in its holding companies.
• The deal covers the 1,000MW Santa Rita, 500MW San Lorenzo, 450MW San Gabriel, 97MW Avion, and proposed 1,200MW Santa Maria power plants.
• It also includes the Interim Offshore Liquefied Natural Gas Terminal.
“First Gen’s gas assets, all of which are located in Batangas City, are investments of national significance and indispensable to the country’s energy security,” First Gen said in a stock exchange filing on Monday.
“The partnership between First Gen and Prime Infra will enable the partners to further nurture, enhance and expand their natural gas platforms to serve as a key solution provider to the country’s program to address energy security,” it added.
What’s next for the Lopezes?
The Lopez family, which continues to operate a robust portfolio of renewable energy assets, will keep 40 percent of the gas business.
“It’s a good opportunity for First Gen to unlock the value of its gas-related assets and refocus on being a pure renewable energy platform,” Colet said.
“The windfall gives the company tremendous financial muscle to make bold renewable energy investments. It’s also possible for them to return some of that cash to shareholders,” he added.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
