CRH lines up Filipino investor

Manila-based investment firm Aboitiz Equity Ventures has announced that it plans to co-invest with CRH in the purchase of the Filipino assets of French cement company Lafarge.

The group already has a diverse selection of investments from energy and banking, to food and land but is looking to spread into infrastructure. It said yesterday it has signed an exclusivity agreement with a non-binding memorandum of understanding with the Dublin-based building materials giant but made no mention of price.

CRH is set to spend €6.5bn on assets, mostly based in Europe, having to be sold by Lafarge and its Swiss counterpart, Holcim to allow for their pending merger. The Filipino aspect of the deal will see CRH gain control of four cement manufacturing plants and associated limestone quarries located on the country’s main island, Luzon.

It is unclear as to how the new ownership of the Filipino assets will be structured; whether it will be an equal joint-venture, or CRH holding majority ownership. Ultimately however, this is likely to be a rare pattern in regard to CRH’s pending new assets.

It is understood that Philippines regulations state that a certain level of ownership of such large assets must have some level of local involvement. It is also understood that the process is at a very early stage, with CRH not commenting on the matter, yesterday.

Aboitiz Equity Ventures chief, Erramon Aboitiz said he was pleased yesterday, at the prospect of a CRH tie-in, adding that venturing into infrastructure meets his group’s growth criteria.

“We are very optimistic of the potential gains this new core business will bring to the group, amid the huge demand for infrastructure in the Philippines,” he added.

Speaking after his group’s AGM in Dublin earlier this month CRH chief Albert Manifold said completion of the purchase of the Holcim-Lafarge assets should happen around mid-July.

He said with the Philippines business being added to CRH’s asset mix, the group will move next year to effectively repackage its growing Asian operations into a separate grouped entity. The group is set to become the third largest building materials group in the world on the back of the €6.5bn asset buy.

At the AGM, Mr Manifold said CRH’s acquisition pipeline is stronger than it has been for some time.