A faction within the Lopez family is questioning the structure of First Gen Corp.’s PHP 62-billion investment in Prime Infrastructure’s hydropower business, citing a contractual provision that could materially reduce the value of the stake if key management changes occur.

At the center of the concern is a clause that would allow Prime Infrastructure, led by businessman Enrique “Ricky” Razon Jr., to buy out First Gen’s 33% interest in the hydropower venture at a 25% discount if First Gen chairman and CEO Federico “Piki” Lopez and his designated executives are removed from their roles.

First Gen is a publicly listed power generation company and one of the flagship firms of the Lopez Group, a Philippine conglomerate with interests in energy, infrastructure, and other sectors. 

The issue has surfaced amid an ongoing internal leadership dispute within Lopez Inc., the family’s holding company, where efforts have been made to remove Piki Lopez from a top leadership position. 

In a statement attributed to Eugenio “Gabby” Lopez III, a former ABS-CBN executive, and who belongs  to a separate faction within the controlling family, the group said it only became aware of the structure during a board discussion:

“This is self-dealing at the expense of all First Gen shareholders and for the exclusive benefit of Piki and his cohorts. We only learned about it and the whole transaction when it was presented at a board meeting that concealed the investment under ‘other matters’ and discussed in an executive session for only one hour.”

The group also raised concerns that the arrangement had not been disclosed to the Philippine Stock Exchange, despite First Gen being a listed company and the size of the transaction.

First Gen initially acquired a 40% stake in the hydropower platform for PHP 75 billion before reducing its holding to 33%, now valued at over PHP 62 billion. The Lopez faction questioned both the reduction in ownership and its implications for voting rights and minority protections within the joint venture.

“We do not know why he didn’t just go down to 33% plus one share to keep his veto power and whether Prime paid a premium for being handed full control. We are blind to everything,” it added.

How should listed energy companies design long-term joint ventures to protect governance rights while still enabling large-scale capital partnerships?

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