The private-equity firm’s proposal values all of First Gen below the indicated worth of its economic interest in EDC alone—before counting gas, hydro and pumped-storage assets
**MANILA—**KKR’s proposal to increase its stake in First Gen Corp. offers shareholders a hefty premium to the power producer’s earlier market price. However, when looked at against a separate takeover proposal for First Gen’s geothermal business, the offer begins to resemble a bargain for the buyer.
The global investment firm has proposed paying ₱35 a share for an additional 8.43% interest in First Gen from parent First Philippine Holdings Corp., then launching a voluntary tender offer at the same price for the company’s entire 11.67% public float. If all targeted shares are acquired, KKR’s economic interest could rise from 19.9% to about 40%, supporting a plan to delist First Gen from the Philippine Stock Exchange.
At ₱35 a share, First Gen’s roughly 3.597 billion outstanding common shares would be valued at ₱125.9 billion. That is more than double the company’s ₱16.12 closing price on July 9, the date cited in the report that prompted First Philippine Holdings to clarify the proposal. Yet it is below the implied value of First Gen’s economic interest in Energy Development Corp. under a separate offer from Indonesia’s Barito Renewables Energy.
That comparison suggests KKR would effectively acquire First Gen at a price that assigns no positive value to the rest of the company.
Two offers, one valuation gap
In July, Barito submitted an unsolicited, indicative, and nonbinding proposal to acquire EDC at an equity value of about $5 billion, or approximately ₱308 billion at the peso conversion rate used in reports about the offer. Including debt, EDC’s enterprise value could reach as much as $7 billion. First Gen said at the time that no discussions had taken place, no agreements had been executed, and no financial advisers had been appointed.
First Gen controls EDC through a 65% effective voting interest, but owns only 45.8% of its economic interest. The Macquarie- and GIC-backed Philippines Renewable Energy Holdings Corp. holds most of the remaining economic value despite owning a minority of EDC’s voting rights.
Applying First Gen’s 45.8% economic interest to Barito’s approximately ₱308 billion valuation produces a gross look-through value of about ₱141.1 billion for First Gen’s EDC stake.
Spread across First Gen’s outstanding shares, that equals approximately ₱39.22 per FGEN share.
KKR is offering ₱35.
The gap is roughly ₱4.22 a share, or 12.1% of KKR’s proposed purchase price. More strikingly, the ₱141.1 billion indicated value of First Gen’s EDC interest exceeds KKR’s valuation of all First Gen equity by about ₱15.2 billion.
The comparison can be summarized this way:
| Valuation measure | Implied amount |
|---|---|
| KKR valuation of all FGEN equity | ₱125.9 billion |
| FGEN’s 45.8% interest in EDC at Barito’s valuation | ₱141.1 billion |
| EDC look-through value per FGEN share | ₱39.22 |
| KKR offer per FGEN share | ₱35.00 |
| Difference | ₱4.22 a share |
| Residual value assigned to everything outside EDC | Negative ₱15.2 billion |
This doesn’t mean KKR has explicitly said First Gen’s other businesses are worthless. It means that, using Barito’s EDC indication as the valuation benchmark, KKR’s price for the entire First Gen holding company is less than the value of its EDC stake alone.
Everything else comes along
Outside EDC, First Gen holds a collection of assets that would ordinarily command substantial value.
The company retained a 40% interest in its natural-gas power business after selling 60% to Prime Infrastructure in November 2025. That retained interest contributed ₱3.97 billion in equity earnings during the first half of 2026. The gas portfolio includes interests in the Santa Rita, San Lorenzo, San Gabriel and Avion power plants, along with the proposed Santa Maria development.
First Gen also has an effective economic interest in the Pantabangan-Masiway hydroelectric complex through First Gen Hydro. The operation generated ₱1.80 billion in first-half net income, up 43.5% from a year earlier, as higher reservoir levels supported more generation and greater participation in the Reserve Market.
Then there is Casecnan, whose owner, Fresh River Lakes Corp., posted an ₱879 million loss in the first half because of reduced water inflows and sizable tax-related and debt-prepayment charges. Casecnan’s near-term performance was weak, but the plant remains a substantial operating hydroelectric asset.
First Gen has also committed to a 33% interest in Prime Hydropower Energy Inc., the vehicle holding stakes in the planned 1,400-megawatt Pakil and 600-megawatt Wawa pumped-storage projects. These developments could eventually provide storage and balancing capacity as more intermittent renewable energy enters the Philippine grid.
Other businesses include First Gen Singapore’s LNG trading activities, Pi Energy’s distributed energy services, retail electricity supply operations, and development-stage geothermal, solar, and hydro projects.
Under the simple Barito comparison, KKR gets exposure to all of those businesses without paying anything positive for them.
KKR’s potential embedded gain
KKR’s proposed purchases cover another 20.1% of First Gen—8.43% from First Philippine Holdings and 11.67% from public shareholders. That represents about 722.9 million shares, assuming the entire public float is tendered. At ₱35 each, KKR would spend approximately ₱25.3 billion on those additional shares.
At the ₱39.22-per-share look-through value indicated by Barito’s EDC proposal, those newly acquired shares would carry about ₱28.35 billion of exposure to First Gen’s EDC interest alone.
The difference is approximately ₱3.05 billion, or ₱4.22 per newly acquired share, before accounting for any value from the gas stake, hydro plants, pumped-storage business, or other operations.
If the transactions were completed and KKR reached 40% ownership, its total share of the gross value attributable to First Gen’s EDC interest would be approximately ₱56.4 billion. That figure includes the value of KKR’s existing 19.9% holding, as well as the additional shares it proposes to acquire.
KKR wouldn’t automatically receive that amount in cash if EDC were sold. Any proceeds would initially belong to First Gen, which could use them for investment, debt repayment, acquisitions or shareholder distributions. KKR’s return would depend on how First Gen employed the proceeds and on the terms of the proposed shareholders’ agreement with First Philippine Holdings.
The discount isn’t entirely free
The apparent bargain comes with significant qualifications.
Barito’s EDC offer is preliminary and nonbinding. It can’t be treated as cash already available to First Gen, and a sale would require negotiation with EDC’s other major shareholder bloc, definitive agreements, due diligence and regulatory approvals. The final value could differ materially from the reported $5 billion indication.
First Gen also carries sizable obligations. The company paid ₱16.5 billion toward its pumped-storage investment in the first half and recorded a remaining ₱45.38 billion subscription payable through 2029. Cash and cash equivalents fell nearly 59% to ₱23.74 billion, while first-half operating cash flow weakened to ₱13.30 billion from ₱21.58 billion.
That subscription payable isn’t classified as conventional interest-bearing debt, but it is a real future claim on First Gen’s liquidity. KKR would also inherit exposure to development risk, holding-company expenses, Casecnan’s volatile hydrology and future capital requirements.
First Gen is also a holding company with a mixture of controlled businesses and minority investments. Cash generated by EDC or the gas companies doesn’t necessarily reach First Gen immediately. Dividends must be declared, and some capital will remain inside subsidiaries and associates to support operations and expansion.
Those factors justify some discount to a sum-of-the-parts valuation. The question is whether they justify reducing the value of all non-EDC assets to less than zero.
Premium price, discounted company
KKR’s proposal remains preliminary, nonbinding and “not capable of acceptance,” according to First Philippine Holdings. KKR reserved the right to amend, suspend or withdraw the proposal, while FPH said it was evaluating the approach in light of recent developments. As of Aug. 12, no agreements had been signed, no formal discussions had occurred, and no advisers had been appointed.
The offer is undeniably generous relative to First Gen’s unaffected stock-market price. It promises public investors a large premium and a clear exit from a thinly traded company. It would also provide First Philippine Holdings with about ₱10.6 billion for the proposed 8.43% block while allowing the Lopez-led parent to retain control under a negotiated shareholders’ agreement.
But a large premium to a depressed market price isn’t the same as a full price for the underlying assets.
Using Barito’s offer as the only available strategic benchmark for EDC, First Gen’s geothermal interest alone is worth about ₱39.22 per FGEN share. KKR is offering ₱35 for the entire company.
The arithmetic leaves investors with a pointed question: If KKR isn’t paying for First Gen’s gas, hydro, and pumped-storage businesses, who is giving them away?
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Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.
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