Notes on the beat: For these tycoons, three’s not a crowd

MANILA, Philippines — This is not a love story, and certainly not the whirlwind kind, but the characters aren’t any different.

There’s Cupid, the so-called god of love; there’s a ‘promiscuous’ partner; then a third-wheel and a courtship that started just days before Valentine’s Day a year ago.

Indeed, the landmark deal that transformed tycoons Manuel V. Pangilinan, Ramon S. Ang and Sabin M. Aboitiz as the country’s liquefied natural gas or LNG triumvirate, did not happen overnight.

It started, initially between MVP and RSA, some 3,000 kilometers away from Manila. It was in Japan or the so-called Land of the Rising Sun where Pangilinan and Ang first tinkered with the idea of rising above their business rivalry.

In the Love Month of February 2023, just a week before Valentine’s Day, the Cupid for business deals pointed his arrow -- the one with the golden tip -- on some of the country’s tycoons.

At a dinner hosted by Mitsui & Co. in the glittering Maple Room of Hotel Okura in Tokyo on Feb. 8, 2023 for President Marcos and the Philippine business delegation, some of the country’s biggest tycoons were present -- Pangilinan, Ang, Aboitiz, Jaime Augusto Zobel de Ayala, Kevin Tan, Alfred Ty and many more, along with key players in the country’s political and business arenas.

On the sidelines, sources said, Pangilinan and Ang got this idea of working together in business as they did in sports when they partnered to form the formidable Gilas Pilipinas national basketball team in 2022.

Thus, the idea to partner outside Gilas was born -- from tollways to power.

It was a win-win deal for both business groups. In the case of power, it meant having more power supply for the MVP Group’s Manila Electric Co. (Meralco) and for Ang-led San Miguel Global Power, it meant unlocking the value of its power plants to further strengthen its war chest.

Nicky Franco, head of research at Abacus Securities, said the deal would also improve San Miguel Corp.’s (SMC) debt metrics and give it more financial flexibility for its airport projects.

The next big question is who approached who?

For tycoons with “supercelestial egos” as Pangilinan describes it -- it’s not easy to make the first move; and perhaps even more difficult to admit it.

But asked about how the LNG deal in particular started, Pangilinan said it was he who made the first move. He proposed to RSA the idea of a business partnership that would help in the country’s energy security journey.

“I told him, let’s see how we can work together in power and help secure the country’s energy security,” Pangilinan told The STAR in a chat in his office last week.

At the end of the day, Pangilinan said, it was something that would be good for the country.

“It rationalizes the gas sector. And what the President wants is energy security. That means adequate supply,” he said.

Thus, the idea of investing into SMC’s natural gas facilities in Batangas was born. Combining investments and expertise in power also meant expanding the country’s LNG capacity, which in turn, would “depress the price,” Pangilinan said.

And then there were three

The idea, no doubt, was promising. And exciting. Due diligence commenced.

It soon became an open secret in the energy sector with other key power players getting wind of the news about the looming partnership.

Along the way, Pangiliinan said there was room for a third partner and they were happy to welcome Sabin Aboitiz whose group is a major power player but with no investments in gas yet.

“We initialed the definitive agreements in late December (2023), almost before Christmas, to freeze the documents, because we had already agreed on almost everything except two more (points),” Pangilinan said.

A sweeper and supercelestial egos

Was it difficult for three powerful tycoons to come together in one deal?

Pangilinan said it certainly wasn’t a walk in the park given their “supercelestial egos.”

“Syempre, I tell all of us, ‘you know, the goal of energy is to transcend all of these, our supercelestial egos and all that.”

In the course of the 12 months, they would meet in neutral territory. These are homes of individuals who happen to be friends with all three of them. These individuals are not necessarily business tycoons but are interested in energy security. One common friend served merienda cena; another hosted dinner.

They also got help from a “sweeper” who is experienced in dealmaking. Like a sweeper in soccer, a sweeper in business parlance is tasked to “clear the dangers that got past the initial defense.”

For this LNG deal, the sweeper is topnotch, considered a rainmaker of sorts.

Thus, with common friends and a sweeper helping them with the deal, three of the country’s biggest tycoons managed to set aside their egos.

The rest, as they say, is history.

It was a Sunday when they announced the deal:

Meralco PowerGen Corp., Aboitiz Power Corp. and SMC Global Power will launch the country’s first and most expansive integrated LNG facility in Batangas in a deal valued at $3.3 billion.

Ang said this represents a major leap forward for the country’s energy future, ensuring not just reliability but also cost-efficient power for many Filipinos as the collaboration will add over 2,500 megawatts of generation capacity.

For his part, Aboitiz said both LNG and renewables are needed to achieve a balanced energy mix and a well-planned energy transition.

Will there be similar deals in the future among the three of them?

Collecting companies

Pangilinan himself said he is not about to stop “collecting companies” just as other individuals collect luxury watches or cars.

But this time, he said, he has become more selective.

“You know, when I was still young or younger in Hong Kong, I was very promiscuous -- any available company, I’d run after,” Pangilinan recalled.

He bought small- and medium-sized companies, DIY stores, shops selling sports apparel, a security agency, a bank and even Dean & Deluca.

After this phase, Pangilinan went for bigger companies.

He isn’t about to stop and hinted that there could be more projects with his fellow tycoons including Ang and Aboitiz. His partnership with RSA, he said, has shown that setting aside rivalry could be good.

“See, if we work together with somebody like Ramon and other titans, it will be better for the country, diba?”