SMC Global Power scales down share offer

MANILA, Philippines - SMC Global Power Holdings Corp., the energy arm of food-to-infrastructure conglomerate San Miguel Corp., has scaled down the size of its maiden public offering, with proceeds now seen to reach between P12.76 billion to P27.335 billion.

In an amended prospectus filed with the Securities and Exchange Commission, SMC Global Power said it is trimming the number of shares it would offer to the public from a range of 300 million to 500 million to a lower 290 million to 385 million.

The shares will be sold at the original indicative price range of P44 to P71 each.

Analysts said the prevailing bearish market condition could be the reason SMC Global has decided to downscale the offering. “Investors are hesitant to put in money in the equities market given volatility in markets overseas,” they said.

Proceeds from the initial public offering will be used to develop greenfield power projects, acquire existing power generation capacities, and for general corporate purposes.

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.

The company is the advanced stages of planning two clean-coal green-field power projects with a combined capacity of 450 megawatts, and is considering additional greenfield power projects with an aggregate capacity of up to 3,000 MW over the next five to seven years.

SMC Global Power is also preparing to bid for selected Napocor-owned power generation plants scheduled for privatization as asset sales.

In addition, the company is pursuing vertical integration of its power business by capitalizing on changes in the regulatory structure to expand its sales of power to a broader range of customers, including retail customers. As part of the reorganization of the power related-assets of San Miguel, SMC Global Power acquired from its parent firm a 100 percent interest in San Miguel Electric Corp. which is in the process of obtaining a retail electricity license from the Energy Regulatory Commission.

Once open access and retail competition are implemented in December 2011, the electricity supplier license will allow SMC Global Power to enter into offtake agreements with customers with power requirements of at least one MW.

SMC Global Power is now one of largest power firms in the country, holding 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.

It has acquired coal exploration, production and development rights over approximately 17,000 hectares of land in Mindanao. If it is able to develop these assets and commence mining operations successfully, SMC Global Power expects these assets will provide a source of coal fuel supply for its planned greenfield power projects.