KKR to hike stake in First Gen for P8.68 billion

GLOBAL investment firm Kohlberg Kravis Roberts & Co. (KKR) said it intends to spend P8.68 billion to raise its ownership interest in Lopez-led First Gen Corp.

In a statement on Wednesday, KKR said its subsidiary Philippines Clean Energy Holding, Inc. is set to acquire 262.94 million of the listed power firm’s common shares at P33 apiece through a block sale on the stock exchange this Friday.

The company said these shares represent 7.3% of First Gen’s outstanding common shares.

“The transaction represents a total investment value of P8.68 billion (around $171 million). With the completion of the share acquisition, KKR, which is an existing shareholder in First Gen, will hold an approximately 19.9% ownership stake in the company,” KKR said.

The private equity firm said Philippines Clean Energy Holding waived its maximum limit of 205 million shares and instead accepted all of the 262.94 million common shares tendered by First Gen’s shareholders.

“We are pleased to have this opportunity to extend our shareholding in First Gen and support its work to provide critical energy solutions to millions of Filipinos across the country. This investment marks the latest milestone for KKR in the Philippines, and deepens our commitment to the market,” said Michael de Guzman, the managing director of KKR’s infrastructure team.

Aside from its stake in First Gen, KKR’s other investments in the Philippines include telecommunications tower platform Pinnacle Towers, Metro Pacific Hospitals, and technology firm Voyager Innovations.

As First Gen conducts its tender offer exercise, it will be removed from the Philippine Stock Exchange index (PSEi) and will be replaced by home improvement and construction supplies retailer Wilcon Depot, Inc., according to a memorandum issued by the local bourse on Wednesday.

The stock exchange added that First Gen will not be part of the industrial index.

“All changes shall be made effective on start of day, Monday, Oct. 11, 2021,” it said.

The memorandum provided no further details.

According to the PSE’s Policy on Index Management released in 2018, a firm may be removed from the main index if “a corporate action causes a significant change in the constituent’s ability to fulfill its requirements,” among others.

The vacancy after a PSEi-listed company’s removal will be replaced by a firm deemed eligible by the exchange.

Wilcon’s inclusion in the bellwether index signifies that companies with “strong” public participation, liquidity, and sound and sustainable business models are likely to benefit from being listed under the main market index, First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.

First Gen shares at the local bourse fell by 7.69% or P2.50 to finish at P30 apiece on Wednesday. Meanwhile, Wilcon’s shares improved 8.1% or P2.35 to close at P31.35 apiece on the same trading day. — Angelica Y. Yang with inputs from Keren Concepcion G. Valmonte