US-based investment firm hikes stake in First Gen

BY LENIE LECTURA – OCTOBER 6, 2021
from Business Mirror

File photo: First Gen’s natural gas power plants in Batangas

Kohlberg Kravis Roberts & Co. (KKR) is investing P8.68 billion in First Gen Corp. which will allow the United States-based global investment firm to secure a 19.9-percent ownership stake in the Lopez-owned power firm.

KKR announced Wednesday that its subsidiary, Philippines Clean Energy Holding Inc., will buy all 262,937,672 common shares that were tendered by First Gen at P33 apiece.

KKR is an existing shareholder of First Gen after acquiring an 11.9-percent stake in the company in January 2020. Once the transaction is completed this week, KKR will increase its ownership to approximately 19.9 percent.

The additional shares will be acquired through a block sale on October 8. “The transaction represents a total investment value of P8.68 billion. With the completion of the share acquisition, KKR, which is an existing shareholder in First Gen, will hold an approximately 19.9-percent ownership stake in First Gen.”

First Gen, a subsidiary of First Philippine Holdings Corp., primarily generates power through renewable energy and indigenous fuel sources such as natural gas, geothermal energy from steam, hydro-electric, wind, and solar power. It has 3,495MW of installed capacity in its portfolio, which accounts for 19 percent of the Philippines’s gross power generation.

“After having been invested in First Gen for this past year, our admiration for First Gen’s business and strategy—including its work to support the energy transition in the Philippines—as well as its board and management team has only increased.

Today, we are pleased to have this opportunity to extend our shareholding in First Gen and support its work to provide critical energy solutions to millions of Filipinos across the country. This investment marks the latest milestone for KKR in the Philippines, and deepens our commitment to the market,” said Michael de Guzman, a Managing Director on KKR’s Infrastructure team.

In May, First Gen announced that it has set aside about $530 million in capital expenditures (capex) this year to fund geothermal, gas and hydro projects.

First Gen Chief Financial Officer Emmanuel Singson said $280 million will be utilized by Energy Development Corp. (EDC), $120 million for its liquefied natural gas terminal and $60 million for its 100-megawatt pumped-storage project.

EDC, he said, is targeting a higher capex this year and is planning to spend about $280 million to catch up on its drilling and investments, as the Covid-19 pandemic resulted in the postponement of key activities last year.