First Gen gets $5-B offer for renewable energy arm
Lopez-led First Gen Corp.’s growing renewable energy arm has caught the interest of Indonesian energy giant PT Barito Renewables, with the latter offering to acquire the subsidiary for $5 billion.
In a regulatory filing on Wednesday, the group confirmed a news report from Bloomberg about an unsolicited offer from Barito Renewables to get a hold of Energy Development Corp. (EDC).
“To date, there have been no discussions between the parties, no agreements have been signed, and First Gen has not appointed any advisors for this transaction,” the company said.
As the group unloads a portion of its stake in gas assets, First Gen is positioning EDC as its core business, with a greater focus on renewable energy expansion.
At present, First Gen has 31 renewable energy facilities that harness the power of solar, wind, hydro and geothermal.
Last March, president and COO Jerome Cainglet said they see the firm “as the anchor for the next chapter of our power group’s life …”
EDC is a big name in the geothermal space, helping the Philippines become the third-largest geothermal energy producer in the global market with about 1,300 megawatts of capacity.
Overseas, EDC is likewise eyeing drilling activities in Indonesia, with six sites on its radar.
To recall, EDC was under the umbrella of state firm Philippine National Oil Co. (PNOC), with its establishment in 1976. Later, PNOC put EDC under a public auction, where First Gen secured an initial 60-percent stake in late 2007 with a P58.5-billion bid.
Sought for his insights, Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said First Gen “should seriously consider monetizing its geothermal portfolio.”
According to Colet, with a 45.8-percent economic stake in EDC, First Gen could cash in about $2.29 billion. This could translate to around P140 billion.
“Given First Gen’s persistent market valuation discount, such a transaction represents an opportunity to return a meaningful amount of capital to shareholders while simultaneously recycling proceeds into more profitable clean energy investments,” he said on Wednesday.
Stock brokerage firm COL Financial said in a separate report that it remains uncertain whether First Gen and its partner GIC/Macquarie Group would be open to divesting their interests in EDC.
Following the news, shares of First Gen went up by 3 percent to close at P19.80 apiece.
