Top Frontier Investment Holdings Inc. (TFHI), the controlling shareholder of San Miguel Corp. that began trading in a separate listing in Manila today, may sell shares this year to help fund expansion and cut debt.
Top Frontier, which owns 66 percent of San Miguel, listed its 490.2 million shares on the stock exchange today without making an initial public offering. It traded at 97.05 pesos a share by the noon break in Manila, compared to its indicative price of 178 pesos. The listing comes after San Miguel on Jan. 2 distributed 240.2 million Top Frontier shares as a dividend. After the listing, San Miguel’s stake in Top Frontier is 0.8 percent, from 49 percent before the distribution.
The shares “need a little time to stabilize first before we move on to the second stage,” San Miguel President Ramon Ang, who also heads Top Frontier, told reporters in Manila. “Investors need to understand a bit more” the relationship between Top Frontier and San Miguel.
Top Frontier may sell shares as early as this year “if the market is good,” Ang said.
San Miguel shares fell 2 percent to 58.80 pesos, headed for their lowest level since July 2009.
“Some investors are treating the shares they got as free, so the listing is like an opportunity for them to take profit,” Allan Yu, who helps manage $8 billion as chief investment officer at Metropolitan Bank & Trust Co., said by phone. “Some looked at it as a good arbitrage opportunity for San Miguel shares.”
Top Frontier said in November its value is about 87.4 billion pesos ($1.96 billion), citing a valuation by an independent financial adviser.
Top Frontier has current liabilities of 42.6 billion pesos, of which 28.7 billion pesos are loans, according to the company’s prospectus posted on its website. The company may invest in three coal mines overseas and is now doing due diligence on the assets, Ang said, without elaborating.
San Miguel’s profit may reach 57 billion pesos in 2013, compared to an earlier estimate of 39 billion pesos, boosted by gains from the sale of its stake in Manila Electric Co., Ang said. It earned 27 billion pesos in 2012.
Nine month profit fell 60 percent to 7.5 billion pesos, after the company posted a foreign exchange loss of 12.3 billion pesos. The peso fell 7.6 percent against the dollar in 2013 after rising 7 percent in 2012.
San Miguel will keep its 49 percent stake in Philippine Airlines Inc., and has no plans to either raise or trim it, Ang said. Its power subsidiary, SMC Global Power Holdings Corp., will push ahead with an initial public offering this year, he added.
San Miguel, which began as a brewer more than 100 years ago, plans to raise about $4 billion selling power assets, Ang said in July, helping fund a $35 billion investment plan that will complete its transformation into an investor in airlines, energy, mining and railways. The company has made more than $5.6 billion worth of acquisitions since 2008.
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