• Home
• Business
• National
• Opinion
• Sports
• Entertainment
• Living

San Miguel Corp. will use proceeds from what could be the country’s biggest share sale to fund acquisitions aimed at deepening its exposure in high growth power and infrastructure sectors, its president said.

Ramon Ang told Reuters the group expects to launch a follow-on share offer in April or May. The share sale could raise more than P200 billion based on prices indicated previously by Ang.

"They’re investing in a company with a very good track record and... very high growth," Ang said regarding the share sale in an interview.

San Miguel had said it would sell 1 billion existing and new common shares, at P200 to P250 pesos per share, a premium of at least 11 percent over the current price. The total offer could be worth P250 billion at most.

San Miguel is now one of the country’s biggest power players after an aggressive diversification from its traditional food and drinks ventures. It also counts oil refinery, telecommunications, mining and infrastructure in its stable of businesses.

San Miguel shares have gained 71 percent since November when it first announced the share sale.

The company declined to give a specific amount for the funds it could raise from the sale.

"We don’t know yet, depends on the underwriters," Ang said regarding the proceeds from the sale in which both San Miguel and its major shareholder, Top Frontier Investment Holdings, are expected to sell part of their stakes.

San Miguel is keen to pursue the sale despite uncertain market conditions and on global worries that food inflation may put pressure corporate profits. Manila’s stock index is down nearly 10 percent this year, the worst performer in Southeast Asia.

"We are not worried about that. If you remember, when we had the IPO of San Miguel Brewery (in 2008), conditions were worse then. We had the subprime crisis then," he said.

With the share sale, San Miguel will be able to lift its public float. Stock exchange data show the company’s public ownership is below the required minimum 10 percent.

"The intention is for us to have a wider shareholder base in the company. It we can take it to 49 percent, why not? The plan is to be able to sell more shares to everybody," Ang said.

San Miguel seeks to expand its businesses by buying state power and infrastructure projects, and investing in new facilities.

"It depends on the opportunity. We will look at them all at the same time. But it depends on what opportunity will come. The focus is on infrastructure, power and coal mining," Ang said.

"The plan is to put up additionally 3,000 megawatts. Hopefully we are able to finish it in five years," Ang said. "Probably it will cost us $5 billion."

San Miguel’s power facilities have a capacity of about 2,000 megawatts, accounting for more than a tenth of the group’s profits.

The conglomerate wants to increase its investment in Indophil Resources NL from 10 percent now, but its decision will depend on the results of a due diligence on the Australian miner.

San Miguel and Indophil have agreed not to extend exclusive talks, which expired on Feb. 10, but both companies are not ruling out sale or partnership possibilities.

"Nothing has changed," Ang said. "We are interested, that is why we invested there."

"There are many details, we are waiting for the confirmation on construction costs, the cost of by-products, we are also waiting for the study on whether a processing plant was needed," he said on the $5.2 billion Tampakan gold and copper mine partly owned by Indophil.

A deal on two toll road projects -- Star Tollways and the Skyway project in Manila -- may come in one or two months, said Ang.

San Miguel is also actively pursuing acquisitions of coal mines outside the country, including in Indonesia and Australia.

"We are looking for coal mines mostly abroad because there are not much coal mines in the Philippines," he said.

Ang said he expects oil, power, infrastructure, consumer, and traditional businesses to each account for a fifth of the group’s revenue in coming years. – Reuters

• Business Insight
• Business