SMC turns Meralco exit into RE capital

San Miguel Global Power Holdings Corp. (SMGP) is turning its exit from Manila Electric Co. (Meralco) into fresh capital for renewable energy, moving on from a 17-year investment that left an estimated P21 billion in forgone dividends after accounting for the cost of money.

The company said Wednesday that the sale of its minority stake to Metro Pacific Investments Corp. (MPIC) will allow it to recycle capital into new projects and businesses where it has a more direct operating role.

SMGP had agreed to acquire the shares at P90 apiece at a time when Meralco was trading at about P57.

“The agreed price therefore represented a substantial premium to the prevailing market price when the transaction was entered into,” SMGP said.

The original agreement also carried fixed-term interest on the purchase price, adding to the investment’s overall cost.

More significantly, SMGP received no dividends from the shares while their transfer remained tied up in litigation. The company estimated the dividends that would have accrued over the 17 years at about P13 billion.

“Factoring in the cost of money over that period, SMGP estimates the value of those forgone dividends at about P21 billion today,” the company said.

With the shares finally transferred last year, SMGP is now monetizing the investment and shifting the capital toward its renewable energy pipeline.

The company stressed that the P90 acquisition price was based on the original 2008 agreement and should not be viewed against Meralco’s valuation when the shares were transferred in 2025.

“The P90 price thus reflects terms agreed in 2008, not a price negotiated in 2025,” SMGP said.

It likewise separated the economics of the original investment from its latest deal with MPIC.

“The sale to MPIC is a separate transaction being undertaken more than 17 years after the original purchase terms were set and reflects current market conditions,” SMGP said.

SMGP is the power arm of San Miguel Corp., with a portfolio spanning conventional and renewable power generation as well as battery energy storage facilities.

Its power assets are operated through subsidiaries including SMC Global Power, SMC Consolidated Power Corp., South Premiere Power Corp. and San Roque Power Corp.