SMC defers anew IPO plan for power unit

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) has deferred anew its plan to list its power generation arm but another subsidiary will be put on the selling block.

In a disclosure, SMC said it is shelving the initial public offering (IPO) plans for SMC Global Power Holdings Corp. as it focused on debt financing to support new power projects.

SMC Global, which has a power generation capacity of 2,500 megawatts and an equity value of at least $1.5 billion, filed its listing plan to corporate regulators in 2011 but the IPO was deferred.

The conglomerate earlier said it was in talks with several potential buyers for an private equity deal or an IPO that would raise a minimum $800 million.

But expansion projects will be backed by the sale of more shares in food and beverage unit San Miguel Pure Foods Co. Inc. (SMPF).

SMC said it is “contemplating to implement a follow-on offering of up to 25 percent of the outstanding shares of SMPF in 2014, at a premium, due to the expected performance of the company.”

In November, SMC sold a 15-percent stake in SMPF to institutional investors for P6 billion, allowing the food and beverage firm to jack up its public float to roughly 16 percent, already above the minimum 10-percent requirement of the local stock exchange.

SMC earlier said proceeds from the sale of more SMPF shares will fund the expansion of the processed meats production plant in Indonesia.

In 2007, the conglomerate started selling parts of key businesses to fund diversification from the mature food and beverage businesses into high-growth and capital-intensive sectors like power generation, mining, infrastructure and telecommunications.

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. So far, around 70 percent of the company’s revenues are already coming from new businesses.

In the first half, foreign exchange losses dragged the diversified conglomerate into the red. Including unrealized forex losses, net loss hit P2.4 billion, reversing the P14.12-billion income in the same period last year.

But SMC’s revenues reached P357.5 billion, up nine percent from last year due to strong performances from food subsidiary SMPF and Petron Malaysia, which was consolidated into the the SMC Group in April 2012.