Salim’s First Pacific Reveals a Sweet Tooth for Philippine Sugar Producer; acquires 34% stake in Roxas Holdings (RHI), the Philippines’ third-largest sugar producer, for $57m

November 18, 2013 Leave a comment

Salim’s First Pacific Reveals a Sweet Tooth for Philippine Sugar Producer

By Johan Mulyadi on 12:30 pm November 16, 2013.
First Pacific, a Hong Kong-based investment company owned by Indonesia’s Salim family, has announced it is spending $57 million for a slice of the Philippines’ growing agriculture sector. The expansion will come through the planned acquisition of a 34 percent stake in Roxas Holdings (RHI), the Philippines’ third-largest sugar producer. First Pacific teamed up with Indofood Agri Resources, an agriculture division of the Salim family’s noodle maker Indofood Sukses Makmur, to form a joint venture named First Pacific Natural Resources to carry out the acquisition.Moleonoto Tjang, Indofood Agri’s executive director, said in a statement on Friday that the acquisition was aimed to “establish a foothold in the Philippines agriculture sector.”

First Pacific will acquire a 31 percent stake in RHI from Roxas & Companies, which will reduce the latter’s ownership to 35 percent. The investment firm will acquire an additional 3 percent share from other investors.

“Our group has been actively investing in the sugar industry around the globe and I am pleased that we have made this acquisition right here in the Philippines,” Manuel V. Pangilinan, First Pacific’s chief executive, said in the statement.

“This project marks a major step forward in our quest to develop meaningful business in sugar milling and refining,” Pangilinan added.

With a 2012 production of 24 million metric tons of sugar cane, the Philippine’s sugar industry is the third-biggest in Southeast Asia after Thailand (96 million tons) and Indonesia (26 million tons).

RHI is the third-biggest sugar refiner in the Philippines with processing capacity of 38,500 tons of cane per day, supplying nearly one-fifth of the Philippine’s sugar production.

The company can produce 18,000 50-kilogram bags of refined sugar per day.

RHI has three sugar mills in the Philippines, one in Batangas and two in Negros Occidental. It also has an ethanol plant in Negros Occidental with a capacity of 100,000 liters of ethanol per day.

First Pacific aims to improve these production numbers by raising capacity utilization and helping farmers improve yields.

“We aim to modernize this industry, working with farmers to increase efficiency, productivity and incomes while providing our shareholders with a strong and growing business,” Pangilinan said.

For Roxas, the acquisition would prepare the company for Asean economic integration in 2015, which is expected to lower tariffs on imported sugar.

“This partnership of Roxas with First Pacific, a leading global player, will strengthen Roxas and prepare it for the industry consolidation that will take place with the advent of the Asean integration in 2015,” Renato C. Valencia, RHI’s president and CEO, said in a statement published on the company website on Friday.

First Pacific engages mainly in Asian telecommunications, infrastructure, consumer food products and natural resources. First Pacific owns 50.1 percent of shares in Indofood Sukses Makmur, which in turn owns a 60.3 percent stake in Indofood Agri Resources.

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