Impact on power competition: Ang’s entry into Lopez empire on ERC’s radar

MANILA, Philippines — Tycoon Ramon Ang’s investment in the Lopez Group has drawn the attention of the Energy Regulatory Commission (ERC), which is ready to assess its potential impact on competition in the electricity market.

ERC chairman and CEO Francis Saturnino Juan said the agency would determine whether the deal breaches market-share limits, given the significant influence of both parties across the energy sector.

“We will look into that, if there is a need to check the impact of the concerned stakeholders’ compliances with market share caps or cross-ownership limitations,” Juan said in a chance interview.

Through his wholly owned holding firm Illumina Investment Holdings Inc., Ang has acquired a 25.7-percent stake in Lopez Inc., the ultimate parent company of the Lopez Group.

The investment at the parent company level gives Ang indirect exposure to several Lopez assets, including power generation arm First Gen Corp.

In a research note, fund manager Eric Jurado estimates that Ang’s indirect economic interest in First Gen is equivalent to 5.79 percent.

Although Ang made the investment in his personal capacity, Juan said the ERC may still consider whether the transaction could have competitive implications for the power sector.

“I still have to get the details of that,” he said. “I do not know if that will make him an officer of that (Lopez Inc.) and at the same time an officer of another (company).”

Furthermore, Juan pointed to Ang’s 3.8-percent stake in tycoon Manuel V. Pangilinan’s Manila Electric Co. (Meralco), adding another significant connection for the ERC to consider.

Latest ERC data showed that Ang-led San Miguel Global Power and First Gen ranked as the country’s second- and third-largest power producers, accounting for 19.62 percent and 10.74 percent of the market, respectively.

Meralco, meanwhile, placed fifth among generation companies with a 6.7-percent market share.

Under the Electric Power Industry Reform Act, no single company or related group may own, operate or control more than 25 percent of the national installed generating capacity.

Sought for insights, Globalinks Securities and Stocks Inc. head of sales trading Toby Allan Arce said the power portfolio is “arguably the most strategically interesting component” of Ang’s investment.

“That does not mean San Miguel or Ang will necessarily pursue transactions involving (First Gen and Energy Development Corp.), but his presence potentially changes the range of strategic options available to the Lopez Group,” Arce told The STAR.