First Gen-Prime Infra deal signals new energy sector ‘power bloc’ — analysts

By Sheldeen Joy Talavera, Reporter

THE PARTNERSHIP between Lopez Group’s First Gen Corp. and Razon-led Prime Infrastructure Capital, Inc. (Prime Infra) is seen to be emerging as a strong alliance in the energy sector, according to analysts.

This follows First Gen’s planned acquisition of Prime Infra’s 2,000-megawatt (MW) hydropower portfolio, building on the latter’s earlier investment in the former’s gas-fired facilities.

“First Gen has long positioned itself as a renewable energy champion while Prime Infra has shown a stronger appetite for gas and infrastructure-scale buildouts,” Peter Louise D. Garnace, an equity research analyst at Unicapital Securities, Inc., told BusinessWorld.

“This structural alignment signals the rise of a new power bloc poised to reshape the energy sector’s competitive landscape,” he added.

First Gen is set to acquire 40% equity interest in Prime Infra’s pumped storage hydropower portfolio for P75 billion, the company announced last week.

The transaction, which is subject to regulatory approval, covers Prime Infra’s 600-MW Wawa pumped storage hydropower project in Rizal province and 1,400-MW Ahunan project in Laguna.

Both projects, which were certified as energy projects of national significance, are targeted for operations by 2030.

“We are pleased to be working hand in hand with First Gen, a trusted partner with a strong track record in power generation, to help execute these critical energy projects safely, efficiently and on schedule,” Prime Infra President and Chief Executive Officer Guillaume Lucci said.

Mr. Garnace said that First Gen’s acquisition of Prime Infra’s hydropower assets is a “strategic move” to accelerate the former’s shift toward renewable energy and accelerate its current portfolio.

“It’s a transformative deal for First Gen due to the scale of its bet on hydro,” said Juan Paolo E. Colet, managing director at China Bank Capital Corp.

Mr. Colet said that First Gen is poised to become one of the largest players in the sector once the projects are completed as its attributable hydro capacity would reach nearly 1,100 MW.

At present, First Gen owns and operates the 132-MW Pantabangan Masiway and 165-MW Casecnan hydroelectric power plants.

First Gen President and Chief Operating Officer Francis Giles B. Puno said that the Wawa and Pakil plants will complement the company’s portfolio, as pumped storage hydropower facilities provide grid stability and reliability.

“Over the long run, the hydro portfolio should help lift First Gen’s earnings given the favorable economics of the pumped storage hydro projects,” Mr. Colet said, noting that this could also lead to better trading multiples for the company’s consistently undervalued stock.

First Gen is an independent power producer with a total installed capacity of over 3,700 MW across natural gas, geothermal, hydropower, wind, and solar technologies.

Last year, Prime Infra acquired a 60% equity stake in First Gen’s gas assets for P50 billion.

The deal covers the 1,000-MW Santa Rita power plant, the 500-MW San Lorenzo plant, the 450-MW San Gabriel plant, the 97-MW Avion plant, and the proposed 1,200-MW Santa Maria plant.