[Vantage Point] Whose P3.5 billion is I&C investing in ABS-CBN?

I&C Holdings is investing P3.5 billion in ABS-CBN, potentially acquiring a 38% stake in the company, which raises questions about the source of its funding. The investment firm was recently incorporated by senior bankers from Fortman Cline Capital Markets, who have a history of significant transactions in Southeast Asia, including dealings with San Miguel Corporation. The recapitalization plan involves issuing new shares that could dilute existing ownership, with I&C potentially becoming ABS-CBN's largest single shareholder, while the Lopez family retains a substantial economic position. This is AI-generated. Read the article for full context. Report any errors. An investment firm, I&C Holdings, is putting P3.5 billion into ABS-CBN and could emerge with roughly 38% of the enlarged company. The bankers behind it are known, but its funding remains less clear—made more intriguing by an earlier report of a Ramon Ang-led group investing the exact same P3.5 billion for a near-identical stake. There is a P3.5-billion mystery at the center of ABS-CBN’s proposed recapitalization, and it has little to do with the Lopez family. It involves I&C Holdings Corp. The newly incorporated investment company is committing P3.5 billion to ABS-CBN’s P6-billion equity infusion. That is 58.3% of all the fresh capital and could leave I&C with roughly 38% of the enlarged company—potentially its largest single shareholder. So who exactly is I&C? Corporate records provide some answers while raising more interesting questions. I&C was incorporated only in February by Daniel D. Ibasco, Gary Emerson P. Cheng, and Clarisse Darlene Rose Tan, all senior investment bankers associated with the Hong Kong-based advisory services firm Fortman Cline Capital Markets (FCCM). ADVICE. The FortmanCline Capital Markets management team (from left) Clarisse T. Tan, managing director; Daniel D. Ibasco, president; Gary P. Cheng, managing director; Michael C. Tiutan, managing director. Courtesy of FortmanCline website Ibasco is Fortman Cline’s president and co-founder. Cheng is co-founder and managing director. Tan is managing director for Philippine investment banking. The three are not unknown financiers suddenly emerging from nowhere. Fortman Cline was founded by Ibasco and Cheng in 2007 and is said to have completed more than US$20 billion of M&A (merger and acquisition) and fund-raising transactions for its clients in Southeast Asia since 2008. Its deal book runs through power, infrastructure, healthcare, logistics, and consumer businesses. One of its better-known transactions in the Philippines was advising Edgar “Injap” Sia on the sale of 70% of Mang Inasal to Jollibee. Another part of its corporate history is particularly relevant today. Fortman Cline has worked extensively with San Miguel Corporation (SMC). Image from FortmanCline website Its published transaction history shows it advising SMC on deals involving Meralco, the Sual and San Roque Power Plants in Pampanga, the Ilijan Power Plant in Batangas, and other major infrastructure projects. More recently, it advised San Miguel Holdings on its successful bid for the 25-year NAIA rehabilitation and operating concession. That deserves attention because Ramon S. Ang has simultaneously entered the Lopez corporate structure by personally acquiring 25.68% of Lopez Inc. through Illumina Investment Holdings Inc. But a relationship is not proof of common ownership. There is no documentary evidence currently showing that Ang owns I&C, finances its ABS-CBN investment, or instructed Fortman Cline’s bankers to execute the deal. Moreover, a long-standing advisory relationship between Fortman Cline and SMC does not establish that I&C is representing Ang. The connection, however, warrants scrutiny; and there is a coincidence that makes the trail even more intriguing. On August 3, before I&C emerged publicly as ABS-CBN’s new investor, the market was abuzz with speculations that an investor group led by Ang was preparing to inject P3.5 billion into ABS-CBN for a 39% economic interest, with Manuel V. Pangilinan reportedly being eyed for an operating role. ABS-CBN subsequently denied that Ang and Pangilinan were discussing a management takeover. Subsequently, the current transaction was introduced to the market. Based on the announced share issuance, Vantage Point’s calculations suggest I&C could emerge with roughly 38% share of the enlarged ABS-CBN. The numerical resemblance is difficult to miss: P3.5 billion for 39% in the earlier report, and P3.5 billion for roughly 38% today. The parallel simply provides another reason to examine where I&C’s P3.5 billion is coming from. The harder evidence lies in I&C’s capitalization. Corporate records show P2.5 billion in authorized capital stock consisting of 2.5 billion common voting shares at P1 par value. But authorized capital tells us little about available cash or investment capacity. What matters is I&C’s subscribed and paid-up capital, its current shareholders, and whether the ABS-CBN subscription is financed by equity, borrowing, or outside investors. This must be emphasized because I&C is not acquiring a token position. ABS-CBN plans to issue 1.644 billion new common shares for P6 billion of fresh equity. Existing shares number about 899.85 million, meaning the new issuance is roughly 183% of the present share count. The dilution is enormous. Based on the announced structure, Lopez Inc.’s direct ownership could fall from 55.82% to roughly 23%, even after investing another P300 million. Crème Investment Corp., Mantes Corp., and Presta Holdings Co. Inc. are investing P2.2 billion collectively, potentially giving them another 24%. Combined Lopez interests could therefore remain around 47% versus I&C’s approximately 38%, while the public float falls below 15%. These remain estimates, pending final subscription allocations and approvals. But I&C could become ABS-CBN’s largest single shareholder. That makes its funding structure a legitimate market issue. The interesting distinction is between adviser and principal. Fortman Cline built its business advising companies and owners on acquisitions, capital-raising, and restructuring. Through I&C, three of its senior bankers now appear on the principal side of one of the country’s most closely watched corporate turnarounds. Are Ibasco, Cheng, and Tan investing their own capital? Has I&C brought in outside investors? Has its ownership changed since February? Is the P3.5 billion partly debt-financed? Or is I&C becoming a permanent investment platform? The corporate records presently available do not answer those questions. ABS-CBN gets something tangible: P6 billion of fresh equity without adding P6 billion of debt. The Lopez family gets a recapitalized company while collectively retaining a substantial economic position. (READ: Gabby Lopez: Man on a mission) I&C gets something potentially more significant: a place beside the Lopez family in ABS-CBN. We know the names of the investment bankers sitting behind I&C; what the market still deserves to know is who is actually funding their P3.5 billion stake. – Rappler.com Below are some Vantage Point pieces you might have missed: Click here for other Vantage Point articles.