SMC set to sell 49% stake in power-generation units

Inquirer Business

Conglomerate San Miguel Corp. plans to sell as much as 49 percent of its stake in power-generation assets, according to president Ramon S. Ang.

On the sidelines of the Manila Electric Co. (Meralco) annual stockholders’ meeting on Tuesday, Ang told reporters that San Miguel wanted to retain only 51 percent or a controlling interest in these assets.

He was, however, quick to dismiss speculations that SMC was selling assets due to challenges in the local energy industry. He also noted that the company was not doing this merely to raise funds, as San Miguel had more than enough cash.

“We have over $3.5 billion,” Ang said.

When asked how the conglomerate will conduct the divestment, Ang said SMC may either sell interests in San Miguel Energy Corp. (SMEC), the company’s energy investment arm, or sell on a per-asset basis, “whichever may be easier.”

Although a number of banks have submitted proposals on how SMC can proceed with the divestment, the company will wait until the market is ready.

Since 2009, San Miguel has acquired from the government the 540-megawatt Limay combined cycle power plant in Bataan, and the contracts to manage the 1,200-MW Sual coal plant in Pangasinan; 345-MW San Roque multipurpose hydroelectric power plant; and the 1,200-MW Ilijan natural gas power facility in Batangas.

Another option under consideration is for SMEC to pursue an initial public offering (IPO) so that San Miguel will eventually be left with 51 percent.

All the proceeds from the planned offering would then be used to fund the activities and work programs of the company’s energy subsidiary, he earlier explained.

Ang had said that San Miguel was focusing on its energy and power businesses, with the aim of increasing the contribution of its power business segment to 25 percent of the company’s annual earnings.

Earnings from its traditional food business would go down to only around 10 to 20 percent, and from its telecommunications business, 30 percent, Ang had said.

As it is, San Miguel is already considered the biggest player in the power-generation industry with a portfolio of around 3,000 MW.