US financial services firm checks out RP (BusinessWorld)

Published in the June 13, 2006 issue of BusinessWorld

The Economy

BY JENNEE GRACE U. RUBRICO, Senior Reporter

US financial services firm checks out RP

American financial services company The InvestLinc Group is looking for investment opportunities in the Philippine energy sector and has been in talks with a number of companies that have power generation assets in the country.
In an interview last Sunday, InvestLinc managing director Ronald E. Bolen told BusinessWorld that his team sent financing proposals for the upgrade and optimization of five power generation assets.
InvestLinc is a 15-year-old financial services firm that started as a private equity fund manager and has evolved into four main lines of business, namely: private equity, real estate ownership and development, wealth management, and energy.
The energy arm, which Mr. Bolen heads, invests in early stage technology companies in the US and looks for investment opportunities in the rehabilitation and optimization of power plants outside the US.
InvestLinc was in the Philippines for a week to meet with the Energy department, the Power Sector Assets and Liabilities Management Corp., and private power firms to assess the local energy sector as well as to identify investment opportunities. Its meetings were coordinated by the US Commercial Service. The Philippines was the company’s last stop for its Southeast Asia visit, which included Singapore and Thailand.
"We are seeking to invest money into existing power plants for the purposes of rehabilitation and modernization. We have [talked to power plant owners]. We conducted a total of 16 to 17 meetings [in the country] through the US Department of Commerce which helped us access [stakeholders]," Mr. Bolen said.
He said that his company has already submitted proposals and requests for the conduct of due diligence for five existing projects. He declined to identify these power plants, saying only that these are spread across the country and have output that range from 1.5 megawatts to 200 megawatts. He also said the plants were run by hydroelectric, coal, natural gas, and diesel. All proposals were for funding the increase in capacity of these plants and some were for a shift in the fuel source, he said.
Mr. Bolen said that among the nations he visited in Southeast Asia, the Philippines topped the list in terms of investment opportunities. "It’s ranked number one and that surprised me. I anticipated the Philippines to be second, possibly third. All of the opportunities we have seen in which we were interested enough to put together a proposal for further due diligence, a greater number exists in the Philippines than in any other country," Mr. Bolen said.
Noting Visayas and Mindanao’s immediate need for additional capacity, Mr. Bolen said these islands pose great opportunities for his firm as he maintained that increasing existing power plants’ capacity will cost less and put more power on stream faster than putting up new generation assets.
"The market only has to absorb a smaller amount of power than if we built a greenfield facility and it can come on line in as short as 12 months versus five to seven years. From the view of the asset owners, we view optimization as a magnificent manner by which additional capacity can be brought into the system without having to experience a net long position [too much power supply]... And because the power comes in quicker, the cash flows are coming in faster. It also reduces my risk," he said.
He also hinted that InvestLinc’s interest in the Philippine energy sector may increase once it gets to visit other power plants, but said that it was too early to say how much in investments the firm will infuse in the country. "Because of our limited time, we saw as many as we could. But there are people to meet and opportunities to see that we haven’t really scratched the surface yet," he said.
Mr. Bolen said that depending on the response the company gets for its proposals, and depending on what happens in other countries it visited, InvestLinc will be coming back to the Philippines by September or earlier.
Southeast Asia is the first market that Investlinc’s energy unit wants to enter into after the US. Mr. Bolen said this is because the regionhas the most opportunities for his firm. After Southeast Asia, Invest-Linc will also look at sub-Saharan Africa, Latin America, and Eastern Europe, Mr. Bolen said.
InvestLinc seeks to provide power companies an alternative funding source to supplier’s credit by putting funds into the asset either through debt or equity.