SMC forms P100-M unit for alternative fuels business

MANILA, Philippines -  SMC Global Power Holdings Corp., the holding company for the power generation business of food to infrastructure conglomerate San Miguel Corp., has formed a P100-million subsidiary that will process alternative fuels.

The new subsidiary, San Miguel Consolidated Power Corp., is primarily engaged in the business of producing and generating capacity and processing fuels alternative for power generation, including expanded operation of energy supply base and the generation and co-generation of electric power as well as the supply and consolidation of the electric power demand of end-users.

San Miguel Consolidated Power shall also carry on all business and services including without limitation, the construction, assembly, testing, commissioning, operation, and rehabilitation of power generating plants, substations and related facilities and equipment.

Of the total authorized capital, P25 million has been subscribed and paid for.

SMC Global is one of the largest power generation companies in the Philippines in terms of installed capacity.

With four power plants, the company held a 17.5-percent market share of the power supply of the national grid and a 23.5-percent market share of the Luzon grid as of June 30, 2011.

The company also owns 33.2 percent of power retailing giant Manila Electric Co., which accounts for almost half of all electricity sales in the country. It is less vulnerable to price increases and supply shortages due to the diverse range of fuels it uses.

SMC Global recently obtained the Securities and Exchange Commission’s nod to double its capitalization to P2 billion in preparation for an initial public offering that is seen to fetch up to P35.5 billion.

The company plans to sell between 300 million and 500 million shares at P44 to P71 each.

Standard Chartered Securities (Singapore) Pte. Ltd. is SMC Global Power’s sole financial adviser as well as joint bookrunner and international managers along with Goldman Sachs Pte., and UBS AG.

On the other hand, ATR KimEng Capital Partners Inc. and SB Capital Investment Corp., will serve as domestic lead underwriters.

Proceeds from the offering will be used to fund expansion projects, including new power plants and the purchase of existing ones.

SMC Global aims to become a vertically integrated power company through the acquisition of coal mines to hedge against fuel costs. It estimates that its generating capacity could double over the next five years given growing domestic demand.