KKR investment shoots First Gen’s shares up
THE recent voluntary tender offer of Kohlberg Kravis Roberts & Co. ( KKR), along with the growing renewable energy sector, boosted First Gen Corp.’s shares weekon-week, analysts said.
The Lopez- led firm saw its shares surge by 19.33 percent week-on-week, despite shedding 15 centavos or 0.56 percent to P26.85 apiece on Friday.
Philstocks Financial Inc. research associate Japhet Tantiangco attributed First Gen’s double-digit improvement to the growing prospects of the renewable energy sector, where it has heavily invested.
“The sector is deemed significant in addressing the country’s energy challenges and even in promoting an environment-friendly economy. Lately, we’ve seen Department of Energy Secretary Alfonso Cusi call for directives for the country’s geothermal energy development,” Tantiangco told TheManilaTimes.
He added the recent KKR tender offer also aided First Gen’s upward momentum.
“With an offer price of P22.50, investors were enticed to pick up the share causing a one day surge of 14.15 percent last May 27. Since then, the share did not fall below P20, giving it a new trading ground,” Tantiangco explained.
KKR unit Valorous Asia Holdings Pte. Ltd. is set to acquire 427,041,291 common shares or approximately 11.9 percent of the energy firm’s outstanding common shares.
Valorous Asia looks to buy the shares at P22.50 or $ 0.45 per share, representing a total investment value of P9.6 billion or $192.2 million.
Also, Diversified Securities Inc. trader Aniceto Pangan said First Gen’s shares climbed up last week after KKR made a substantial investment in the firm.
“Mainly, the entry of the new investor provided the optimism for other investors to invest into the firm,” he said.
Pangan added that the new foreign investor “would provide the upward momentum towards achieving the right valuation for the company.”
Meanwhile, Tantiangco doesn’t see KKR’s move having further impact on First Gen’s shares moving forward, as the investor have yet to disclose any plans that would affect the firm’s structure or operations.
“Over the long term, it could give a boost to sentiment if First Gen would be able to find further opportunities amid the growing prospects for the renewable energy sector. The pace of recovery (of its) earnings would (also) play an important part in sustaining the positive sentiment,” he noted.
He further said the strong result of First Gen’s shares last week makes it susceptible to profit taking, making a pull back possible.
Tantiangco sees support for First Gen Corp.’s shares at P24.