By Bilyonaryo Staff
Indonesian billionaire Prajogo Pangestu’s proposed acquisition of Energy Development Corp. (EDC) could unlock billions of dollars for the Lopez group while putting one of the richest valuations ever on a Philippine power company.
According to JPMorgan, Barito Renewables Energy’s unsolicited, non-binding proposal values the Federico “Piki” Lopez-led renewable energy company at US$5 billion in equity and US$7 billion in enterprise value, including net debt.
Pangestu is paying a hefty premium. His offer values EDC at 38 times earnings, more than triple the ASEAN power average, and at three times book value, about 150 percent above regional peers.
Pangestu’s offer also values EDC at 13 times EV/EBITDA, a measure that compares the value of a company’s entire business before interest, taxes, depreciation and amortization. That is about 24 percent above the ASEAN power-sector average of 8.3 times.
The biggest winner could be First Gen Corp. EDC’s parent, whose stock has been undervalued by the market.
“At this reported valuation, the deal could also unlock US$2.43 billion for FGEN’s 45.8% economic stake (65% voting interest) in EDC, more than 2x of its current market cap,” said JP Morgan.
Another major shareholder, Philippines Renewable Energy Holdings Corp. (PHREC), the joint venture between Singapore’s wealth fund GIC and Australia’s Macquarie Grop, owns 47.5 percent of EDC’s common shares and 34.9 percent of its voting interest, making it another key beneficiary should the transaction proceed. PHREC had wanted to divest from EDC as early as 2024 with the ir shares valued at $2 billion. PHREC bought the shares in 2017 at $1.3 billion.
But why is Pangestu willing to pay a rich price for EDC’s assets?
JPMorgan noted that EDC has 1,544 megawatts of attributable renewable capacity, including 1,303 MW of geothermal generation, making it the country’s largest geothermal producer. Barito’s proposal implies an enterprise value of about US$4.5 million per megawatt, roughly 13 percent to 50 percent above the estimated $3 million to $4 million cost of building new geothermal capacity.
The acquisition would also give Pangestu immediate control of the Philippines’ dominant geothermal platform at a time when renewable energy assets are attracting increasing foreign investor interest.
Barito could become the second major Indonesian renewable energy player to enter the Philippine market after Pertamina New & Renewable Energy acquired a 20 percent stake in Citicore Renewable Energy Corp. last year.
The bank expects foreign interest to remain strong, citing the Philippines’ Green Energy Auction Program, which has awarded 22.3 gigawatts of renewable energy projects since 2022 under long-term fixed-price contracts.
