Fresh placement to reduce Ayala’s stake in real estate arm

MANILA, Philippines – Ayala Land Inc.’s (ALI) raised P16 billion ($353.95 million*) in new shares offering, the real estate unit of Ayala Corporation (AC) announced Monday, January 12.

The placement represented a landmark transaction as the single, largest capital-raising exercise in ALI’s 23 years as a listed company, ALI president and chief executive officer Bernard Vincent O. Dy said.

“The funds generated will support our aggressive growth trajectory as declared in our 2020 Vision,” Dy said. The 2020 Vision was developed by Ayala Land as it concludes its “5-10-15 program,” a 5-year plan covering 2009 to 2014 aimed to hit the net income of P10 billion ($222.92 million) and return on equity (ROE) of 15%.

But the fresh placement of 484,848,500 common shares at P33 ($0.73) apiece over the weekend is seen to reduce its parent company, AC’s stake in ALI.

AC’s stake in the property giant would slide to 47.3% from 48.9%, according to its disclosure to the Philippine Stock Exchange.

Despite that, the parent company will retain its voting rights at over 68.9%, AC explained.

“We remain committed and supportive of Ayala Land, and continue to believe that it is a key component of our portfolio and an important driver of growth at Ayala Corporation,” AC’s chair and CEO Jaime Augusto Zobel de Ayala said.

A huge bulk of the AC’s capital expenditure (capex) goes to ALI.

In 2014, 38% of its P190-billion ($4.23-billion) capex went to the listed real estate developer.

To complement its parent company’s spending, ALI said it will allocate for 2015 at least P100 billion ($2.23 billion) for its various projects.

The property giant aims to meet its P40-billion ($891.68-million) net income target by 2020, with its 2015 capex that is higher by 42.8% from its programmed P70-billion spending last year.  

In 2014, ALI poured P80 billion ($1.78 billion) to develop the 74-hectare Arca South, its new central business district near the southern ends of major thoroughfares EDSA and C5, right along the South Luzon Expressway.

In the same year, ALI also announced that it would spend P75 billion ($1.67 billion) to transform a 1,100-hectare master-planned, township development in Central Luzon over a 20-year period.

The Ayala subsidiary’s portfolio also includes ongoing development projects Vertis North in Quezon City; South Park District in Bicutan; Circuit City in Makati; and Bonifacio Global City in Taguig. 

Outside the capital, ALI also has existing projects in secondary cities, including Cagayan de Oro, Cebu, Iloilo, and Palawan. It is also exploring General Santos and Koronadal cities in Mindanao. – with a report from Mick Basa / Rappler.com

$1 = P44.95