ALI mulls higher stake in Malaysian property firm

MANILA, Philippines - Ayala Land Inc., the property arm of conglomerate Ayala Corp., is mulling increasing its minority stake in a Malaysian property company, a ranking official said.

ALI chief financial officer Jaime Ysmael said the company is looking into the possibility of borrowing in Malaysian ringgit to raise the necessary funds should it decide to exercise its option to increase its stake in Modular Construction Technology Bhd.

“We’re looking at possible options but we’ve already funded our initial investment. We’re just matching the currency. We still have an option that we can exercise (to increase our stake),” Ysmael said.

 Borrowing in the same currency of the investment required reduces foreign exchange risks, he explained.

 He stressed, however, nothing is final yet, noting the borrowings could be about the same size of the initial investment in the Malaysian company, which was equivalent to roughly P1.9 billion.

Borrowing options include issuing bonds or doing a bilateral loan.

It was in April when ALI announced its wholly owned subsidiary, Regent Wise Investments Limited, acquired 9.16 percent of Malaysian company GW Plastics Holdings Bhd., which would be renamed MCT Bhd.  The shares were acquired through a private placement for a total amount of $43 million or P1.9 billion.

 Established in 1999 as a construction company, MCT is a property developer that specializes in mixed-use projects that include retail, office, hotel, and mid- to affordable residential.

The company has several ongoing projects in OneCitySubang Jaya and Cyberjaya, as well as a land bank in Dengkil, 1.5 kilometers away south of Cyberjaya, all located in the Klang Valley in Malaysia.

“By partnering with a company such as MCT, Bhd., ALI will be expanding its footprint in Southeast Asia in line with its diversification goals and sets the platform for growth in Malaysia,” ALI said.

“This allows ALI to enter the Malaysian market with an experienced team, benefit from synergies of the partnership, and further add value to MCT over the long term to enable it to be a key player in the Malaysian real estate market,” it said.

Aside from the Malaysian market, ALI is also looking into other markets in the fast booming Southeast Asian region, particularly Vietnam and Myanmar.

The group’s preferred mode for expansion is to buy into companies.

“That’s the right way to do it. We are looking for companies with existing track record and capability so we don’t have to reinvent the wheel. We share the same vision. So (buying into companies) that would be our preferred mode rather than doing it greenfield by ourselves,” he said.

Ayala’s planned expansion coincides with the ongoing integration in the region through the so-called 2015 Association of Southeast Asian Nations Economic Community.

Through the AEC, the 10 member nations operate under a single market and distribution base to compete and integrate within the larger global economy.

Aside from the Philippines, other Asean countries include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam.