First Gen Corporation announced the immediate resignation of board director Manolo Michael De Guzman after private equity firm Kohlberg Kravis Roberts & Co. (KKR) completely divested its 20% stake in the energy company.
The company disclosed De Guzman’s departure to the Philippine Stock Exchange (PSE), though it has yet to name his replacement. The incoming director is expected to represent Gateway Partners, the Dubai-based investment firm that acquired KKR’s 715.86 million shares through its Cayman Islands-registered entity, Angsana Finance Ltd.
The block transaction was executed at ₱36 per share, valuing the deal at roughly ₱25.8 billion. Funding for the buyout was reportedly arranged through Bank of Commerce, an institution controlled by San Miguel Corporation (SMC) head Ramon S. Ang, who recently secured a major stake in First Gen’s ultimate parent company, Lopez Inc.
De Guzman, who leads infrastructure investments in Southeast Asia for KKR, also represents the firm on the board of Metro Pacific Health.
Commenting on the divestment, Chinabank Capital Corp. managing director Juan Paolo Colet noted that KKR was simply realizing its investment gains after holding the stake since 2020. He added that because the transaction involved existing secondary shares, First Gen will experience no immediate financial impact.
”KKR had been in First Gen since 2020, so it was about time for it to exit and realize a return on its investment. The buyer is controlled by Gateway Partners, an alternative investment manager focused on emerging markets in Asia and Africa,” said Colet.
”There is no immediate financial impact on First Gen because this is just a secondary transaction. It remains to be seen how Gateway will engage with Piki [First Gen Chairman Federico R. Lopez] on First Gen’s strategic direction,” he noted.
Colet pointed out that Gateway Partners will need to unlock substantial value to earn an attractive return at the ₱36 purchase price, suggesting potential mergers and acquisitions involving First Gen or its subsidiary, Energy Development Corp. (EDC), could be on the horizon.
The divestment follows a separate, rejected attempt by KKR to acquire a larger stake in the power producer. Parent firm First Philippine Holdings Corp. (FPH) previously turned down KKR’s proposal to purchase an additional 8.43% stake for ₱10.6 billion at ₱35 per share, alongside a voluntary tender offer to buy out the remaining public float and take First Gen private.
”After careful deliberation and consideration, FPH has determined that KKR’s proposal does not represent First Gen’s true value,” FPH stated in a previous PSE disclosure, confirming it had rejected the non-binding offer.
Following FPH’s rejection, analysts warned of a possible market reaction. COL Financial Group Inc. senior research manager George Ching previously noted that the decision could trigger a short-term pullback after First Gen’s stock rallied on the buyout news.
”Given the significant increase in First Gen’s share price (up 44 percent) since the news came out of KKR’s offer, the decision by FPH to reject the proposal could result [in] a significant correction in First Gen’s share price in the near term,” Ching said.
”In terms of the ₱35-per-share tender offer price, we believe this is close to First Gen’s fair valuation at this point (COL fair value estimate is ₱34.70 per share). Furthermore, the offer is a significant 64-percent premium to First Gen’s market price,” Ching added.