Ayala Land unit signed a call option deal to further raise its stake in Malaysian property developer MCT Bhd.
Property giant Ayala Land Inc. (ALI) has expressed an interest to increase its stake in MCT Bhd. in a bid to seize opportunities in the fast-growing region of the Association of the Southeast Asian Nations (Asean).
In a disclosure to the stock exchange, ALI said its wholly owned unit Regent Wise Investments Limited has signed a call option agreement with two founders of MCT—Barry Goh Ming Choon and Tong Seech Wi—to give ALI “the opportunity to increase its shareholdings in MCT up to a maximum of 32.95 percent.”
Regent Wise currently owns 9.16 percent of MCT through a $43-million or P1.9-billion private placement last April.
ALI said that the call options are still exerciseable for one month beginning October 7 this year.
“The signing of the agreement affirms ALI’s confidence in its partnership with MCT and the synergies that will benefit both companies,” ALI said.
Formerly GW Plastics Holdings Bhd. before its recently conducted backdoor listing, MCT or Modular Construction Technology is a mid-sized property firm expert in the area of mixed-use projects that include retail, office, hotel, and mid- to affordable residential.
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 cap.
Earlier, ALI President and Chief Executive Officer Bernard Vincent O. Dy said MCT’s operations are almost the same as the company’s, which is involved 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,” the top ALI executive said.
With the current 9.16-percent interests, Dy said ALI has secured one board seat out of the seven seats in the board of directors, which will give them “some influence in terms of strategic direction” for the growth of MCT’s brands—pointing out that the company will not have its brands through the Malaysian firm in the foreign market.
“We felt it is a good opportunity to participate in this company and hopefully be able to grow the company together with them as Malaysia continues to grow,” Dy said.
Aside from Malaysia, ALI has ongoing talks and process in its entrance in particular markets in the region, which included Indonesia, Vietnam and Myanmar, but is still anchoring its main business growth in the Philippine market which is expected to corner the bulk of the firm’s revenues in the next few years.
ALI’s 2014 performance exceeded expectations as its profits rose by 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.
For this year, the company is setting aside P100-billion spending which will be sourced from the P16-billion share placement in February, internally-generated cash and P15 billion to P20 billion from various debt raising initiatives being the P7 billion was raised recently via debt issue.
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., Bank of the Philippine Islands, and LiveIt Investments, among others.