(Jan 28): The Philippines’ sovereign wealth fund will acquire a 20% stake in Synergy Grid & Development Phils Inc for 19.7 billion pesos (RM1.48 million), giving the government a hand in governing the China-backed power transmission operator.

The wealth fund will buy preferred shares offered by Synergy for 15 pesos each, Maharlika Investment Corp president and CEO Rafael Consing Jr said in a briefing on Tuesday. The investment will guarantee a dividend yield of about 6% over the first three years, rising to 8% when the shares are converted to common shares, he said.

The acquisition will mark Maharlika’s first investment since its inception in 2023 and which, officials say, will alleviate concerns about foreign influence over critical infrastructure and the country’s energy security. It will be the company’s “flagship investment”, Consing said.

Synergy owns 40.2% of the National Grid Corporation of the Philippines, or NGCP, which operates the nation’s power transmission system. Shares of Synergy surged nearly 11% on Tuesday.

NGCP is 40% owned by the State Grid Corp of China and has been facing scrutiny from the House of Representatives over issues including project delays and Chinese ownership.

“There would be greater transparency, at least from the standpoint of the government, if we have a view of the operations of NGCP,” Energy Secretary Raphael Lotilla said in the same briefing. “And if NGCP is stating there’s nothing to fear from their presence, we’ll be in a better position to confirm or affirm that.”

The parties signed a binding agreement on Monday, witnessed by President Ferdinand Marcos Jr, according to a statement from his communications office. “In the end, we found a good solution to everyone’s concern,” Marcos said.

Maharlika will be keen on buying shares held in NGCP by China’s State Grid “if it becomes available”, Consing said, but added that the wealth fund has not had any discussions with the Chinese firm. Its investment into Synergy will allow Maharlika to get two board seats each at Synergy and at NGCP.

The wealth fund will fund the investment from capital infused by state banks Development Bank of the Philippines and Land Bank of the Philippines, Consing said.

NGCP started managing and operating the Philippines’ power transmission system in 2009. It has a 25-year concession to operate the transmission system, which can be renewed for another 25 years.

Uploaded by Arion Yeow