The Henry Sy-led conglomerate, SM Investments Corp. (SMIC), said it is in exploratory talks for possible partnership deals with some companies from China and Russia that have expressed plans of entering the Philippine market following President Rodrigo Dutere’s goodwill visits to those countries.
Duterte has brought back billions of dollars worth of pledges of investment and loans from the government, companies and banks of China after his state visit.
“We are discussing with certain groups, but nothing has been finalized,” SMIC Chief Financial Officer Jose T. Sio said.
The Russian and Chinese companies that have shown interest are operating in the same sectors where the SM group has “competitive advantage,” namely property, retail and banking, he said.
These investors are very keen on taking advantage of the opportunities in the domestic market, Sio said, although he declined to identify the companies.
“There are many opportunities in the Philippines. We have our young educated people — that is our advantage. We have many things to develop, including infrastructure, airports, mining, etc. There are many opportunities here, and we opened ourselves up to China, Russia and the US,” he said.
Given China’s vision to be a world power, it is seen likely to ramp up its investment in emerging markets such as the Philippines. Sio predicts that in about 50 years, China could unseat the US as the leading world power as the US pursues a stance to “close its boundaries” to protect its citizens and give them back their jobs.
That creates an “opportunity for another power to lead the world. [For China,] it is a possibility and they have the resources to do it. Not necessarily [lead]the world, but they can lead Asia. Europe is Europe. South America has its own group. In Asia, we should be led by China and Japan,” Sio said.
Next bond issue
Meanwhile, Sio said SMIC is still “looking for the right time” to issue the next tranches of its P50-billion bond offer program.
“We still have P30 billion. Next year, depending on the market, it could be peso- or dollar-[denominated bonds]. That’s why it will depend on the market. If the market is right, we’ll go out [and issue them],” Sio said.
Earlier this month, SMIC raised P20 billion from the initial tranche of its P50 billion bond offer under shelf registration. The bonds carry a yield of 5.1590 percent per year and will mature in 2023.
Funds raised from its bond program, which can be issued within a span of three years, will go to financing future investments and strategic acquisitions within SMIC’s core businesses in property, retail and banking segments.
“We borrow not because we need the funds now. It is not a necessity for us. We borrow because of the opportunity,” Sio said.
He said one example of an opportunity is the acquisition of a minority stake in the growing dormitory chain MyTown, which has a transaction value of more than P1 billion.
Asked about other acquisition opportunities the group is currently looking at, Sio said: “They are under our core business – the three (property, retail and banking). We have several entities being discussed, but as I said, we are committed to confidentiality. We cannot disclose [that right now.]”
SMIC is led by Henry Sy, the richest man in the Philippines. The company holds Sy’s main businesses in retail (SM Retail Inc.), real estate (SM Prime Holdings Inc.) and banking (BDO Unibank Inc.), while also having non-core businesses through investments in mining, entertainment and tourism.