Hong Kong-listed conglomerate First Pacific plans to acquire more infrastructure projects in the region after sealing its first last month, according to executive director Robert Nicholson.
The group, which holds interests in Philippine Long Distance Telephone (PLDT) and Indonesia's instant-noodle maker Indofood, bid US$56.7 million for a water supply and sewage treatment concession in Manila last month as part of the first step in branching out into 'all sorts of infrastructure' investments with strong operational cashflows such as power generation and toll roads, Mr Nicholson said.
In the deal scheduled to close tomorrow, the group and its ally will gain an 84 cent stake in Maynilad Water Services, which supplies water and treats sewage in urban Manila under a 25-year franchise that expires in 2022.
The company is moving into infrastructure to make up for the shortfall in recurring earnings it will face from the backdoor listing in Singapore of its subsidiary's palm oil unit.
According to independent financial adviser Somerley, First Pacific would reap a one-off gain of US$25.7 million this year from the listing.
'We will see a dilution of earnings from the oil and fat refining unit as a result of the listing but this is a growth sector and we believe the medium-term earnings will rise,' Mr Nicholson said.
He said First Pacific aimed to raise its stake in PLDT by 3.2 per cent to 27.5 per cent for about US$255 million in conjunction with Japan's NTT DoCoMo boosting its 14 per cent shareholding in PLDT by also acquiring an additional 3.2 per cent.
Brokerage Goldman Sachs forecast that First Pacific's financial health would improve due largely to bigger dividend income from PLDT that should jump to US$130 million next year from US$83 million last year.
With cash inflows from other business units, First Pacific's net debt was expected to drop to US$74.1 million next year from US$152.6 million last year, the brokerage said. A Thomson First Call poll showed net profit was to grow 27.4 per cent to US$131.29 million last year.
First Pacific shares fell 2.19 per cent yesterday to HK$4.02.