DoubleDragon tapping debt market to raise P3B

MANILA, Philippines - The soon-to-be-listed property firm of Mang Inasal founder Edgar “Injap” Sia II and Jollibee Foods owner Tony Tan Caktiong is tapping the debt market to raise at least P3 billion in the next few months.

Fresh capital from the bond and notes issuance will bankroll majority of the firm’s programmed P6.35-billion capital spending this year, its top official said.

“A few months after the listing, we will be working with underwriters again to possibly offer bonds, notes or a combination to raise the P6.35-billion funds needed for the CityMall project,” Sia said.

“We’re looking at the first tranche of P3 billion in the next few months,” he said.

DoubleDragon will sell 579.73 million primary shares at a maximum price of P2 apiece, allowing the company to raise P1.15 billion. Excluding costs such as listing and underwriting fees, the company expects to raise P1.03 billion.

DoubleDragon is jumpstarting this year its P24-billion program to become the largest community malls chain in the Philippines.

“For this year, we need P6.35 billion and a total of P24 billion for the next five to six years,” Sia said.

DoubleDragon aims to reach one million square meters (sqm) of total leasable space portfolio by 2020, of which 700,000 sqm is expected from the planned 100 CityMall community malls, mostly in the Visayas and Mindanao.

Sia said the initial public offering (IPO) will increase the desirability and rates for DoubleDragon’s bond or notes.

At a 12 to 15 percent annual yield for its community malls, DoubleDragon can easily pay the debts with interest rates of four to five percent, he said.

In the medium term, recurring income through the office towers and CityMall will account for 70 percent of earnings, Sia said. In 2013, DoubleDragon’s net income jumped 32 percent to P126.63 million from P92.48 million, almost entirely coming from residential sales.

“The demand is strong even up to the high side [of the indicative IPO price],” said Eduardo Francisco, president of underwriter BDO Capital & Investment Corp. Unicapital Securities Inc. and RCBC Capital Corp. are also facilitating the IPO.

“We seek to give back to our shareholders by adopting a dividend policy of up to 30 percent of unappropriated and unrestricted net income after tax,” Sia said.

DoubleDragon was initially created as Injap Land Corp., the real estate arm of Injap Investments Inc., in 2009. In July 2012, it was renamed DoubleDragon as it became a 50-50 joint venture between Injap Investments and Honeystar Holdings Corp. of Tan Caktiong.