• ALI buys 9.16% stake in MCT Bhd for $43M, to issue P7B debt notes

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    Property giant Ayala Land Inc. (ALI) expanded its reach in the Association of Southeast Asian Nations (Asean) region with its purchase of a minority stake in a Malayan township.

    In a disclosure to the Philippine Stock Exchange, ALI said its wholly owned unit, Regent Wise Investments Limited, has acquired a 9.16-percent interest in Malaysian real estate firm MCT Bhd. through a $43-million or P1.9-billion private placement.

    Formerly GW Plastics Holdings Bhd. before its recently conducted backdoor listing, MCT or Modular Construction Technology is a mid-sized property firm with expertise in mixed-use projects that include retail, office, hotel, and mid- to affordable residential properties.

    MCT has a market capitalization of $450 million, which is classified as a mid-sized property company, compared to the largest Malaysian real estate firm with $2.5 billion to $3 billion market capitalization.

    “As you know, Asean is one of the fastest growing regions in the world. Although the Philippines is growing as quickly, we feel that there are also other areas of opportunities in the region that we could possibly participate in. One of those countries which is experiencing fairly good growth rates not only this year is Malaysia,” ALI president and chief executive officer Bernard Vincent O. Dy said in a press briefing.

    “Malaysia has about 30 million people, GDP [gross domestic product]is over 5 percent, and the economy is bigger than the Philippines. We feel Malaysia is a market that shows a lot of opportunity for us to participate in,” he told reporters after the company’s annual stockholders meeting.

    Dy spoke of MCT’s operations which is almost the same as the Ayala property firm that involves itself in townships, residential, office, retail, and hotels — but is more focused to meet the demand of the middle-income housing in Malaysia.

    “We continue to look for opportunities. When we look at Malaysia, we feel that that market is promising. We feel this a vehicle that we can grow with together with the principal shareholders,” he said.

    With the 9.16-percent share, ALI will occupy one of seven board seats, which will give them “some influence in terms of strategic direction” for the growth of MCT’s brands.

    “We will see how things turn out. We remain open. As it is right now, we’re coming in with over 9 percent equity stake, and we will evaluate it if at some point in time there is an opportunity, depending on how things work out. That is something we will be open to,” Dy said.

    Aside from Malaysia, ALI has ongoing talks for possible entry into particular markets in the region, which included Indonesia, Vietnam and Myanmar.

    ALI Vice President and Treasurer Augusto D. Bengzon said the company is in “the book-building process” of its planned P7-billion bond offering within the month, which will be used to finance the company’s projects this year in line with the P100-billion capital expenditures (capex) for 2015.

    “We’re already in the institutional boo-kbuilding process. Price setting should happen in the next two weeks. After which, we will go to a one week offer period about end of April to first week of May,” Bengzon said.

    The P7-billion bond offer is the second tranche of ALI’s P15-billion bond offering, of which P8 billion was already issued in April 2014.

    The offer’s underwriters included HSBC, PNB Capital and Investment Corp. and China Banking Corp.

    Jaime Ysmael, ALI chief financial officer, said that a small issue of P1 billion to P2 billion home starter bonds will follow suit and some bilateral loans from subsidiaries will be taken up to finance the P100-billion capex this year.

    “We’re still on track on our planned borrowings that will allow us to partly fund the P100 billion capex for the year,” he said.

    ALI’s 2014 performance exceeded expectations as its net income went up 26 percent to P14.8 billion from P11.7 billion a year ago — surpassing its target to grow 20 percent annually. Revenues likewise increased 17 percent to P95.2 billion from the previous year.

    The company is on track on its 2020-40 plan, which involves growing ALI’s profits by 20 percent yearly to P40 billion by 2020 from P11.7 billion in 2013.

    Ysmael said the P100-billion capex will be sourced to the P16-billion share placement in February, internally-generated cash and P15 billion to P20 billion from various debt raising initiatives.

    ALI is involved in property development, commercial leasing, hotels and resorts, construction and property management of the Ayala Group.

    It is the property unit of the conglomerate Ayala Corp., which also has units including Manila Water Company Inc., Globe Telecom Inc., Integrated Microelectronics Inc., BPI, and LiveIt Investments, among others.

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