Hong Kong-based First Pacific Company and Philippine infrastructure conglomerate Metro Pacific Investment Corporation (MPIC) have established a joint venture focusing on infrastructure investment in Asia’s emerging markets, which they have named FPM Infrastructure Holding.
The two strategics have also made their first investment from the joint venture, paying $132 million in cash for a 29.45 percent stake in Thailand’s Don Muang Tollway Public Company (DMT), according to a joint statement. The seller was the $96 million Asia Infrastructure Fund of Capital Advisors Partners Asia (CapAsia), managed by Singapore-based infrastructure private equity firm CapAsia, which is majority-owned by The Rohatyn Group (TRG).
This is the first and final exit out of the Asia Infrastructure Fund (AIF), according to CapAsia chief executive Johan Bastin. The fund is currently being wrapped up and returns distributed to investors. CapAsia assumed control of AIF after its former manager Babcock & Brown went bankrupt in 2009, and the DMT investment was the only one made from the fund.
While the returns CapAsia received for the divestment were undisclosed, a source close to the matter told Infrastructure Investor that the firm beat the usual Asian infrastructure return benchmarks of 16 percent to 20 percent over the six-year investment period.
DMT is one of only two private toll companies in Thailand, and operates a 22-kilometre tollway stretching from the centre of Bangkok to Rangsit, a densely populated area north of the city. It also passes through Don Muang International Airport, and the new government administrative centre will be constructed along its route.
“DMT is an excellent example of the infrastructure investment opportunities available in Southeast Asia,” Bastin said in the statement. “It also illustrates the availability of exit routes for such investments.”
This is MPIC’s first investment outside its home market, although First Pacific has several investments across the Philippines, Indonesia and Singapore. First Pacific has not invested in the Thai market since its 2001 divestment of Berli Jucker Public Company.
“We are seeing more opportunities outside the infrastructure market of the Philippines,” Manuel V. Pangilinan, managing director and chief executive of First Pacific, said in the statement. “We welcome the prospect of diversifying our investments.” In the new joint venture, First Pacific will hold a 75 percent stake while MPIC will take the remainder.
“We’re hopeful for a warm welcome in Thailand as we seek to diversify into new markets,” added Jose Ma. K. Lim, president and chief executive of MPIC. “Strong economic growth, a level playing field and a regulatory regime that welcomes investment combine to form a strong foundation for us to build our new project on.”
First Pacific and MPIC have $12.6 billion and $4.4 billion assets under management, respectively. CapAsia has approximately $400 million assets under management across its three existing funds, and in January held a $100 million first close on a fourth ASEAN-focused infrastructure fund targeting $350 million.