KKR offers to buy over 8% First Gen stake from parent First Philippine Holdings

First Philippine Holdings Corp has rejected a proposal by global investment firm KKR to acquire an 8.43 percent stake in its majority-owned subsidiary, First Gen Corp. The rejection came after the initial offer was made by KKR, which sought to purchase the stake directly from First Philippine Holdings. According to a statement released on August 17, First Philippine Holdings stated that the proposed acquisition did not reflect the true value of the power generation unit. The initial offer from KKR was announced on August 12, when First Gen Corp disclosed that the firm had approached them with a bid to buy 8.43 percent of the shares held by First Philippine Holdings in the company. The deal would have allowed KKR to gain control of a portion of First Gen’s equity while also launching a voluntary tender offer for the remaining public float of 11.67 percent of the company’s 3.6 billion outstanding common shares. This tender offer was intended to support a petition to delist First Gen from the Philippine Stock Exchange. Under the terms of the initial proposal, KKR would have paid 35 pesos per share, which would have valued the entire company at approximately 126 billion pesos. However, this valuation was later corrected following a media report that suggested a higher total stake of 20.1 percent. The revised figure implied a much larger valuation of nearly 165.44 billion pesos, equivalent to roughly $2.69 billion, based on the current exchange rate of one U.S. dollar to 61.5410 Philippine pesos. Despite these figures, no formal discussions between KKR and First Philippine Holdings have taken place. Both parties issued statements clarifying that the proposals were still under consideration, though First Philippine Holdings ultimately decided against proceeding with the offer. In its rejection notice, the company emphasized that the proposed price did not align with the actual market value of First Gen, which was last reported at 110.63 billion pesos as of Friday’s trading session. First Philippine Holdings currently owns 67.84 percent of First Gen, making it the largest shareholder in the power producer. The company operates through multiple subsidiaries, including First Gen Corp, which is a major player in the energy sector within the Philippines. Its operations span coal-fired power plants and other renewable energy projects, contributing significantly to the country’s electricity supply. The potential delisting of First Gen from the Philippine Stock Exchange was a key component of KKR’s proposal. A voluntary delisting typically involves the company seeking approval from regulatory authorities to remove its shares from public trading. Such a move could be driven by strategic considerations, such as restructuring, cost optimization, or shifting focus toward private ownership. While KKR did not comment on the rejection, the firm has previously expressed interest in acquiring stakes in Philippine-based businesses, particularly in sectors with long-term growth potential. The energy industry remains a focal point for foreign investors due to the country’s increasing demand for electricity and government initiatives aimed at expanding infrastructure. As of now, there is no indication that KKR will pursue alternative avenues to acquire a stake in First Gen. The situation underscores the complexities of cross-border investments in emerging markets, where valuation discrepancies and regulatory hurdles can influence the outcome of deals. Investors and stakeholders will continue to monitor developments as both parties assess the implications of the rejection.