Kohlberg Kravis Roberts (KKR) agreed on Monday to buy a 11.9 per cent stake in Philippine power producer First Gen Corporation for 9.6 billion Philippine pesos (US$193 million) in its latest infrastructure bet in southeast Asia.
The American private equity giant is betting on future growth in Asia, particularly in the infrastructure and real estate spaces.
For example, the company acquired solar power assets in India from Shapoorji Pallonji Infrastructure Capital for US$204 million in April and led a consortium that acquired a 6 per cent stake in Vietnamese real estate developer Vinhomes Joing Stock Company for US$650 million in June.
“We have long viewed First Gen as an exceptional business with a high-calibre leadership team, and we have great respect for the Lopez family for building this strong, well-established company,” David Luboff, head of Asia-Pacific infrastructure at KKR, said in a statement. “This is an exciting and further milestone for KKR’s Asia-Pacific infrastructure business.”
KKR, through an entity owned by its investment funds, will pay 22.50 Philippine pesos a share on July 1 to acquire 427 million shares in First Gen following a tender offer.
Shares of First Gen rose 0.44 per cent to 22.60 Philippine pesos in midmorning trading on the Philippine Stock Exchange.
First Gen is a subsidiary of First Philippine Holdings Corporation, a Philippine conglomerate whose businesses range from property and construction to education and health care. The conglomerate is controlled by the Lopez family, one of the country’s wealthiest families.
The company generates power with natural gas, as well as through renewable energy sources, including geothermal, hydro, wind and solar. It accounted for about 21 per cent of power generation in the Philippines in 2019.
“[The investment is] especially exciting given the accelerating transition we all need to make toward a decarbonised future and we look forward to engaging with a world class global investor, such as KKR, as we navigate the journey ahead as partners,” Federico Lopez, the First Gen chairman and chief executive, said in a statement.
First Gen represents KKR’s first infrastructure investment in the Philippines and its third investment overall in the country, following investments in Metro Pacific Hospitals, the largest private hospitals operator in the Philippines, in December and Voyager Innovations, a technology firm, in April.
It comes as KKR has placed a greater significance on investing in Asia, which accounted for more than 30 per cent of its investment portfolio in the first quarter.
Scott C. Nuttall, KKR's co-president and co-chief operating officer, said on the company’s first-quarter earnings call in May that its Asia investment gave the company better insight into how the coronavirus pandemic was playing out and how soon Europe and the United States could emerge from the crisis.
“When the crisis started, we moved to kind of a daily call with the top people in the firm from all around the world, including in Asia,” Nuttall said on the May 6 call with analysts. “The Asia team is sharing its insights from what they're seeing with our portfolio and on the ground, very early. And so we've been able to kind of learn from that as we adjust our approach in Europe and the US and on the back of those learnings.”
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