SMC power unit proceeds with $700-M IPO plan

MANILA, Philippines - Food-to-power conglomerate San Miguel Corp. (SMC) is pushing through with the $700-million (P28.7 billion) initial public offering (IPO) of its power generation unit after a two-year delay, the company’s top official said.

The plan to finally list SMC Global Power Corp. came amid the continuing strong performance of the local stock market.

“We are in talks now. We are actively in talks with our bankers to do the IPO,” said SMC president and chief operating officer Ramon S. Ang.

“I think the equity value of the generation company is at least $1.5 billion. If we sell 49 percent, we hope to raise at least $700 million,” Ang said.

In 2011, SMC Global filed its IPO plan to corporate regulators. The power generation firm earlier planned to raise P24.7 billion-P36.6 billion by selling between 348 million to 519.7 million primary and secondary shares in the local bourse.

But the IPO of the country’s top power producer was put on hold due to the bearish market performance at that time.

Ang who said SMC Global is in talks with three banks and with cornerstone investors who will support the listing.

SMC Global owns and operates the Sual, Ilijan and San Roque power plants that generated a total of 15,250 gigawatt-hours of electricity last year.

The Philippine Stock Exchange index has recorded 28 record highs so far this year, with the most recent at 7,215.35, making it one of the top five best performing stock markets in the world.

From its core brewery and food business, SMC has expanded into power production, downstream oil sector (Petron Corp.), packaging (San Miguel Yamamura Packaging Corp.), airline (Philippine Airlines) and several infrastructure projects like the Caticlan airport, Skyway and the NAIA Expressway.

Its net income surged 57 percent to P27.6 billion last year. In 2011, its profit  sank 13 percent to P17.5 billion due to the absence of non-recurring gains.