US global investment firm Kohlberg Kravis Roberts (KKR) has agreed to buy an 11.9 percent stake in Philippine power producer First Gen Corporation. On Monday, the company announced that it will be paying $193 million for the stake as part of its latest initiative to increase its investment in the Southeast Asian region.
KKR's investment represents the company's continued belief in Southeast Asia's massive contribution to the future growth of the region. The company is particularly interested in increasing its bets in sectors such as energy, real estate, and infrastructure.
Apart from its substantial stake purchase in the Philippines, KKR also made massive investments in other Asian countries, including a $204 million acquisition of solar power assets in India from Shapoorji Pallonji Infrastructure Capital. Earlier in the month, KKR also led a consortium of companies in the purchase of a 6 percent stake in Vietnamese real estate developer Vinhomes Joing Stock Company, which it bought for $650 million.
In a statement released after it reached the stake acquisition agreement with First Gen, KKR's head of Asia-Pacific infrastructure, David Luboff, mentioned that the deal marks an exciting milestone for the company and its Asia-Pacific infrastructure investments. He added that the company acknowledges First Gen's exceptional and high-caliber business and it believes that the investment will pay off.
Under the agreement, KKR will be paying 22.50 Philippine pesos or roughly $0.45 per First Gen share. The purchase of 427 million shares will be made on July 1 following a tender offer. After news broke out of the transaction, First Gen's share prices rose by 0.44 percent to 22.60 Philippine pesos per share on the Philippine Stock Exchange.
First Gen Corp, which is owned by the Lopez Family, is a subsidiary of the First Philippine Holdings Corporation. The parent company is involved in a wide range of businesses in industries such as health care, energy, construction, real estate, and education.
First Gen mainly generates power through renewable energy sources, such as natural gas, wind, solar, geothermal, and hydro-electric. In 2019, the company generated around 21 percent of the total power generated in the Philippines.
KKR's stake purchase in First Gen represents its first infrastructure investment and third major investment in the Philippines. In December of last year, KKR made an investment in Philippine private hospital operator Metro Pacific Hospitals. This was then followed by another investment in Philippine tech firm Voyager Innovations in April.
KKR's investments in Asia currently account for about 30 percent of its investment portfolio. The company is planning to increase that number in the coming quarters with additional strategic investments in the region.