Andrew Tan takes over Fil-Estate Land

MANILA, Philippines - Alliance Global Group Inc., the investment holding firm of tycoon Andrew Tan, is taking over Fil-Estate Land Inc. (FELI) in a deal valued at around P5 billion, a move aimed at further solidifying its presence in the highly competitive property sector as it makes an aggressive push into tourism-related development.

In a disclosure to the Philippine Stock Exchange, AGI said it signed an agreement to subscribe to five billion common shares of FELI for a total subscription price of P5 billion in cash. 

A company official, who requested not to be named, said the shares to be purchased will give AGI approximately 60 percent ownership of FELI, which is led by the group of businessman Robert John Sobrepeña. 

AGI said the subscription will be paid in two tranches with the last payment subject to the Securities and Exchange Commission’s approval of FELI’s increase in capitalization from P5 billion to P10 billion.

“We are acquiring a stake in Fil-Estate Land in line with AGI’s strategy of investing in tourism projects outside of Metro Manila.”We believe that tourism is our country’s newest sunshine industry,” said AGI president Kingson Sian.

AGI’s purchase of a majority stake in FELI will allow the Tan-owned holding company to   develop more than 1,000 hectares of tourism-oriented communities in the country’s prime tourist spots such as Tagaytay, Nasugbu and Boracay, Sian said.

We are confident that our investment in FELI will ultimately create a lot of value for shareholders of both AGI and FELI. It will bolster our bid to make Alliance Global Group the biggest player in the Philippine tourism industry,” Sian said.

AGI, one of the country’s largest conglomerates, is an active player in a wide range of industries from real estate development to food and beverage, quick service restaurants, and hotels and resorts development.

The deal is seen as a win-win situation for both AGI and FELI, which has long been scouting for partners to complete most of its real estate projects which had been relegated to the back-burner due to tight liquidity problems.

The 1997 financial crisis has put FELI in a bind, draining its coffers which led to difficulty in meeting obligations.

 To get back into the mainstream, the Fil-Estate Group adopted a strategy that entails the sale of non-core assets and partnerships with other property developers or entities to fund its big-ticket projects.

AGI has interests in property development through Megaworld Corp., food and beverage (Emperador Distillers Inc.), and quick-service restaurants (McDonald’s).

AGI early this week said it was allocating P7 billion for new tourism projects that will create synergies with Resorts World Manila, its first integrated complex project.

Resorts World Manila, a joint venture between AGI and Malaysia’s Genting Group, features the country’s largest casino to date, an iconic mall and three hotels.

Consistent with its strategy, the Fil-Estate Group is likewise open to divesting its stake in Metro Railway Transit 3, which traverses Edsa from North Ave in Quezon City to Taft Avenue in Pasay City. The group owns 29 percent of MRT-3.