THE MAHARLIKA Investment Corp. (MIC) is looking to raise $1 billion for energy projects, one of its priority investment areas, according to its chief executive.
“I’ll be requesting approval from the board to raise about $1 billion of separate funding purely for energy,” MIC Chief Executive Officer and President Rafael D. Consing, Jr. said at a forum organized by the German-Philippine Chamber of Commerce and Industry late on Wednesday.
Mr. Consing said the $1 billion may be raised through private equity and limited partnerships (LPs) with other countries’ sovereign wealth funds.
“I’m speaking to some sovereign wealth funds this early and we have to go through a formal process,” he said.
The MIC is currently working on putting sectoral limits or the cap on how much will be invested in each priority sector.
“You’ve got a sectoral limit. If you stay there, then that’s all you can spend. But if you create a fund, and in which case, our sector limit is going to be our contribution in the fund, then we’re able to increase our spending effectively,” Mr. Consing said.
“What we’ve identified now is we’ve put in risk limits, sectoral limits. That’s roughly about 15% of AUM (assets under management), which means that for every sector, we can only invest about 15% of total funds.”
Mr. Consing said these percentages may still be fine-tuned over the next few years.
With the corporation’s initial capital of P125 billion, the cap per sector would be at about P18.75 billion.
“What we intend to do is to create a limited partnership with some sovereign wealth funds… We will be the fund manager of an LP, meaning they will be paying us fees to deploy. Our contribution to the fund will be the P18.75-billion risk limit that we have. Therefore, P18.75 billion will be effectively converted into $1 billion. And that’s how we’re able to therefore spend it more than two or three times that time,” Mr. Consing said.
The MIC’s priority sectors include energy, physical and digital infrastructure, food security, aviation and aerospace, mineral processing, transportation and tourism.
Under energy, it seeks to invest in renewable energy, grid modernization, electricity distribution and new sources to “diversify supply and create price stability.”
The bulk of the fund’s initial investments will be focused on energy, Mr. Consing earlier said. It plans to announce its first commitment, which would likely be to an energy-related project, in the next two to three months.
The MIC has an authorized capital stock of P500 billion. Its initial capital of P125 billion comes from contributions from the Land Bank of the Philippines (P50 billion), Development Bank of the Philippines (P25 billion) and the National Government (P50 billion).
In July last year, President Ferdinand R. Marcos, Jr. signed into law Republic Act No. 11954, which created the Maharlika Investment Fund, the Philippines’ first sovereign wealth fund. — Luisa Maria Jacinta C. Jocson
