SMIC OKs Waltermart investment

MANILA, Philippines - Mall and banking conglomerate SM Investments Corp. (SMIC) has finalized its decision to buy into the Waltermart Group of Companies, a top company official said.

SMIC chief finance officer Jose Sio said the group of retail tycoon Henry Sy is wrapping up its due diligence for the 50-50 partnership with Waltermart which is expected to beef up SMIC’s bottom line.

“We are proceeding with the investment for Waltermart,” Sio said in an interview.

He said SMIC, which would buy into Waltermart for an undisclosed amount, finds the location of Waltermart malls attractive.

In January, SMIC, through its mall developer SM Prime Holdings Inc. and supermarket firm SM Retail Inc. entered into a joint venture with Waltermart. SMIC then began a six-month due diligence.

Sio said the due diligence, which is already close to completion, is showing good results so far.

SMIC vice chairperson Teresita Sy-Coson earlier said that the conglomerate and its units would not take over the management and business of Waltermart. Instead, the 50-50 partnership would  allow for the expansion of Waltermart  malls and supermarkets.

“This year it will contribute [to SMIC’s bottom line] but we hope we can increase the contribution [over time],” Sio said.

Earnings of SMIC jumped 16.5 percent to a record P24.7 billion last year on the back of continuous growth in consumer spending.

The conglomerate is seen to benefit from the market reach of Waltermart whose branches are located in the outskirts of Metro Manila.

Waltermart operates 17 shopping centers across Metro Manila and northern Luzon.

To date, there are around 20,000 tenants in SM malls around the country. For every tenant slot, four entrepreneurs are in line to secure that spot, Sio said.

Last year, SM Retail added 34 new stores composed of five SM department stores, four SM Supermarkets, seven SM Hypermarkets and 18 SaveMore stores. To date, the group now has a total of 202 stores.

SM Prime, for its part, is opening this year the SM Aura Premier in Taguig City and SM Cauayan in Isabela while SM Megamall would be expanded with the construction of Building D.

By the end of the year, SM Prime would have 48 malls in the Philippines and five in China with an estimated combined gross floor area of 6.7 million square meters.

Consumer-related businesses, particularly shopping centers and supermarkets are expanding their portfolio, driven by continuous growth in the consumption-driven Philippine economy.

Lucio Co-led grocery chain Puregold Price Club Inc., for instance, is branching out in Mindanao with the opening of its flagship store in Cagayan de Oro and an S&R Membership Club in Davao as part of plans to hit 200 stores before 2015.

Other major players in the malls and supermarket segments like Gokongwei-led Robinsons Land Corp. and Ayala Land Inc. have likewise programmed expansion projects.