KKR buying into Lopez First Gen for P9.6 billion

MANILA, Philippines — Singaporean firm Valorous Asia Holdings Pte. Ltd. is buying into First Gen Corp. for P9.6 billion after completing its tender offer.

First Gen disclosed yesterday that global investment firm KKR, through Valorous, completed its voluntary tender offer on the Lopez-led firm, with shareholders tendering 427,041,291 common shares representing approximately 11.9 percent of the outstanding common shares.

Following the successful tender offer, Valorous said it intends to acquire all of the tendered common shares at a price of P22.50 per common share, or a total investment value of P9.6 billion, on July 1.

The said number of shares and investment value is higher than what Valorous had initially offered.

The Singaporean firm made a tender offer to purchase six to nine percent of the Lopez firm’s total issued and outstanding shares, covering at least 215.87 million up to 323.81 million common shares of First Gen.

It projected the acquisition cost to be at least P4.88 billion and P7.29 billion at most.

KKR partner and Asia Pacific infrastructure head David Luboff said the group is thrilled to make its first power investment in the country.

“We have long viewed First Gen as an exceptional business with a high-caliber leadership team, and we have great respect for the Lopez family for building this strong, well-established company,” he said.

“This is an exciting and further milestone for KKR’s Asia Pacific infrastructure business, and we are pleased to have this opportunity to be an investor in First Gen, able to positively engage with the company’s management team and the Lopez family as helpful in the future,” he said.

Southeast Asia is a key part of KKR’s Asia infrastructure strategy, and KKR’s investment in First Gen extends the firm’s track record as an active investor in Southeast Asia across asset classes.

Meanwhile, First Gen is KKR’s third investment in the Philippines, following its investments in Metro Pacific Hospitals – the country’s largest private hospitals operator and healthcare network – and in Voyager Innovations, a leading technology company.

“We welcome the news of KKR’s successful tender for First Gen shares and feel quite honored of the confidence they have in our country, our company, our management and the strategic choices we’ve made toward clean energy,” First Gen chairman and CEO Federico Lopez said.

“It’s especially exciting given the accelerating transition we all need to make toward a decarbonized future and we look forward to engaging with a world class global investor, such as KKR as we navigate the journey ahead as partners,” he said.

KKR is looking to find more investment opportunities in the country, said Michael de Guzman, a managing director on KKR’s Infrastructure team.

“We are very pleased with the result of this tender offer and are honored to be an investor in First Gen, a world-class infrastructure institution that plays a critical role in the lives of many Filipinos. KKR has now invested more than $1 billion in the Philippines and we continue to look for new opportunities to support the country’s growth trajectory, its leading companies and its families through our infrastructure, private equity, real estate and credit investing businesses,” he said.

Incorporated in Singapore last March 16, Valorous is a holding company and has a primary purpose of acquiring, holding and disposing of investments, including shares of stock, notes and other securities of any business entity.

Its parent firm is KKR Asia Pacific Infrastructure Holdings Pte. Ltd., which is under KKR & Co. Inc.  – a global investment firm that manages multiple alternative asset classes including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds.

First Gen is one of the Philippines’ largest independent power producers and is a subsidiary of First Philippine Holdings Corp. owned by the Lopez family.

It primarily generates power through renewable energy and indigenous fuel sources such as natural gas, geothermal energy from steam, hydro-electric, wind, and solar power.

First Gen has 3,492 megawatts of installed capacity in its portfolio, which accounted for 21 percent of the Philippines’ gross power generation in 2019.