Philippines' 40 Richest Power Surge

Brian Mertens, 06.22.11, 06:00 PM EDT 
Forbes Asia Magazine dated July 18, 2011 




The Philippines' power sector, plagued by a legacy of inefficient state ownership and underinvestment, is in the limelight as a liberalization process begun in 2001 gathers speed. With demand for electricity climbing 4% annually, perennial brownouts and hardly any large-scale power plants in the pipeline until 2014, the country's tycoons are rushing to plug the gap.


 One strong incentive is favorable regulatory changes and privatization structures, which were designed to attract much-needed investments.




 Several of the country's wealthiest have snatched prize generation and distribution deals at attractive prices in a privatization wave that saw a dearth of foreign bidders amid the global financial crisis. More than 70% of generation assets once in government hands have been privatized. Today power companies account for over one-third of the total market capitalization of the Philippines Stock Exchange.


 A new electricity leader is Eduardo Cojuangco's San Miguel, which spun off its brewery operations in 2007 to fund new businesses. It has acquired four major plants to become the nation's largest independent power producer; it owns one-third of former state-owned unit Manila Electric Co. (Meralco), the largest distribution grid. According to Credit Suisse ( CS -  news  -  people ), by next year San Miguel will be generating more profits from power than from its famous beers and other beverages.


 Last year mall magnate Henry Sy's son and namesake Henry Sy Jr. led the group's charge into power paying $590 million to buy Enrique Razon's 30% stake in transmission firm National Grid, in which Robert Coyuito holds 30%. A proposed backdoor listing of the unit should boost their wealth further.


 Construction tycoon David Consunji's power play has enriched him: Shares of his DMCI have been doubling every year since 2009, when it bought a 600-megawatt coalfired plant from the government.


 Another big boomer is Aboitiz Power Corp., whose market cap has soared eightfold since 2008, boosting the wealth of Enrique Aboitiz and his nephew Jon Ramon. Aboitiz is investing $2.8 billion to add 1,400 megawatts of capacity. With all this action, competitive pressures are likely to increase, but Credit Suisse predicts that capacity will lag demand through 2014, helping shore up prices.