HOW rich are the families who own and control most of the companies listed on the Philippine Stock Exchange?
The answer would be “Very, very rich,” because these wealthy families would never relinquish control of any of the companies in their group that are publicly held and listed on the Philippine Stock Exchange.
The market’s rule works in favor of the majority stockholders because the bulk of their companies’ outstanding shares belong to them and, to become listed, they are required to share only 10 percent of the outstanding shares issued to outsiders.
Due Diligencer is sorry to disappoint foreign investors who may be planning a takeover of listed companies. The 10-percent minimum public ownership rule is intended to protect the country’s big businesses from foreign “invasion” or encroachment. Foreigners may be able to join the majority stockholders but only as passive stockholders.
As a starting piece on their wealth, Due Diligencer computed the holdings of businessman Henry Sy Sr. and his family in SM Investments Corp. (SMIC), their listed holding company. As culled from filings posted on the PSE website, the family owns 447.301 million SMIC shares (56.174 percent of 796.272 million outstanding common shares. They may own much more because the percentage equivalent is based only on public ownership reports, which may not necessarily reflect a listed company’s ownership profile.)
Again, here is another question: Why start with the Sys?
Answer: Due Diligencer is only following up on the report that appeared in Forbes magazine listing the 89-year-old Sy patriarch as the richest Filipino this year with a net wealth of $12.7 billion. The others in the magazine’s ranking would come later.
Computed at the 52-week high of P866 per share, the 447.301 million SMIC shares owned by the Sys were worth P387.363 billion. But they became poorer by P89.013 billion, or 22.979 percent, when the stock earlier dropped to a 52-week low of P667.
These numbers, however, represent only the “paper value” of the family’s SMIC shareholdings. Since the Sys did not lose anything when the stock dropped to a year low of P667, it would be safe to conclude that they did not feel the huge loss. Instead, they could have bought more SMIC shares in the open market to take advantage of the share price falling to P667, and they would have been ahead by P199 per share (P866 high minus P667).
How about “guesstimating” how much cash the Sys own? Certainly no one would have the exact answer. But to give readers of The Manila Times a view of the family’s “partial wealth in the bank”, Due Diligencer traced the cash dividends SMIC declared over a four-year period: P10.34 per share or a total of P8.234 billion in 2014; P7.402 billion paid on June 30, 2013; P10.40 per share or a total of P6.384 billion paid on June 21, 2012; and P9.04 per share or a total of P5.532 billion paid on June 22, 2011.
That’s a total of P27.552 billion taken from SMIC’s retained earnings, which still topped P100 billion at P108.147 billion as of Dec. 31, 2013 and P116.105 billion as of June 30, 2014, including consolidated net profit of P8.798 billion in the first six months of 2014.
In addition, SMIC also distributed 157.630 million shares as stock dividend on Aug. 1, 2013.
Now here are the computations, the results of which may not be exact but nevertheless could approximate the amount of the Sys’ paper wealth: Since the Sys own 56.174 percent of SMIC’s 796.272 million outstanding shares, their share from the P27.552 billion cash dividends from 2011 to 2014 would amount to P15.477 billion.
On the other hand, the Sys also received 88.547 million in stock dividend (56.174 percent of 157.630 million shares). At the 52-week high of P866 per share, they were richer by P78.527 billion—again on paper—which, when added to the cash dividend, would make the Sys’ dividend wealth alone amount to P94.107 billion.
SMIC is only one of the companies that belong to the group controlled by the Sys. Because SMIC is listed, it is easy for the public to look into its financials. Thus, Due Diligencer was able to peek into the holding company’s worth and the family’s share from it based on its filings.
The Sys also control up to 24.36 billion shares, or 87.566 percent, of 27.819 billion outstanding shares of SM Prime Holdings Inc. At P16.52 per share, which was the last traded price on Monday, their SM Prime stake would be worth P402.427 billion.
With SM Prime’s recent cash dividend of P0.19 per share, P4.628 billion was added to the Sys’ P94.107 billion dividend wealth on June 10, 2014, for a total take-home cash of P98.735 billion.
Why give up control when it really pays well to be the majority owners who, thru the board, decide how much of their company’s unappropriated retained earnings should be allocated as dividends, either in cash or in stock, and how much to keep for posterity, meaning untouched or appropriated forever for expansion projects?