SMC explores more investment options

LONDON – San Miguel Corp. (SMC) is still on the lookout for opportunities to diversify its income streams as it pursues local infrastructure projects and an offshore oil and gas venture, its top official said.

“We will look for more opportunities but we are not in a hurry,” SMC president and chief operating officer Ramon S. Ang told reporters invited for the inaugural Manila-to-London direct flight by Philippine Airlines (PAL).

“The company is in good position, with a very good cash flow to be able to finance all its existing new projects,” he said.

For instance, he cited an offshore investment for an oil and gas project that is close to being finalized.

In December, SMC announced it is looking into a $5-billion acquisition of an Asian firm involved in the energy sector.

For its part, PAL is nearing an agreement to acquire Cambodia Airlines in partnership with the Royal Group of Cambodia.

The diversified conglomerate owns 49 percent of PAL and is in charge of the airline’s management while tycoon Lucio Tan controls the remaining 51 percent, which is up for sale.

“I think the progress of somebody buying the stake of Mr. Tan is quite good. They are almost on the final stage of doing a deal between the two of them,” Ang said.

Ang said SMC will also join the bidding for the P17.5-billion Mactan Cebu International Airport expansion contract on Nov. 15.

“We will surely give them a good competition. We are known to always submit the best offer so we hope to win that bid,” he said.

The Department of Transportation and Communications has pre-qualified seven groups for the project: the San Miguel-Incheon Airport consortium, the partnership of Ayala Corp. and Cebu-based Aboitiz Equity Ventures, Gotianun family’s Filinvest Group, the partnership of Pangilinan-led Metro Pacific Investments Corp. and the Gokongwei family, and SM-led Premier Airport Group of retail magnate Henry Sy.

For existing businesses, SMC is also not in a rush to sell shares and raise fresh funds.

There are no pressing need to sell stocks in Bank of Commerce and San Miguel Pure Foods Co. Inc., Ang said.

“No need for new investors [in Bank of Commerce] but if there’s an opportunity and we need to recapitalize, we will easily put in more capital,” Ang said.

But SMC is ready to listen to offers of prospective buyers, he said.

“Many firms are interested in our business so that means we have a good portfolio,” Ang said.

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 (PAL) 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.

Ang said the Tarlac-Pangasinan-La Union Expressway, which is nearing its full completion, is already preparing for the influx of vehicles through a provision for another lane for the toll road.

In the first half this year foreign exchange losses dragged the SMC conglomerate into the red. Including unrealized forex losses, its 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.