Prajogo Eyes Acquisition of Philippine Geothermal Giant Valued at Rp90 Trillion

Indonesian billionaire Prajogo Pangestu is reportedly planning to acquire Energy Development Corp. (EDC), the largest geothermal company in the Philippines, as part of his energy business expansion in Southeast Asia.

Through Barito Renewables Energy, which is under his control, Prajogo has submitted an initial unsolicited, indicative and non-binding offer to acquire EDC.

According to reports by Forbes and VN Express, the transaction is estimated to be worth US$5 billion, or around Rp 90 trillion (assuming an exchange rate of Rp 18,000 per US dollar).

The offer still depends on the due diligence process and approval from the relevant regulators, according to First Gen Corp., EDC’s largest shareholder, which is based in Manila, in its official statement.

“To date, there have been no discussions between the two parties and no agreement has been signed,” First Gen said in its statement.

The company, controlled by tycoon Federico Lopez and his family, also stressed that it has not appointed a financial adviser for the transaction.

EDC was previously owned by the Philippine state before being acquired by the Lopez Group in 2007. The company currently owns and operates 16 geothermal power plants across the Philippines with a total installed capacity of 1,300 megawatts (MW).

In addition, the company has nearly 300 MW of other renewable energy generation capacity, derived from hydro, solar and wind power.

Juan Paolo E. Colet, Managing Director of China Bank Capital Corp., said the acquisition proposal could potentially increase value for shareholders if it materialises, as quoted by the Philippine newspaper Business World.

“With the market valuation discount that First Gen has continued to experience, a transaction like this could be an opportunity to return significant capital to shareholders while reallocating the proceeds to more profitable clean energy investments,” Colet said.