The CFO's balancing act

Manila, Philippines -  Giant billboards showing the famous faces of Paris Hilton, Donald Trump, and other big-name celebrities are starting to lord over Manila’s major roads, mirroring the frenetic activity in the country’s property sector. The good times are definitely back and everyone wants to get a piece of the action.

For the fourth year in a row, the economy is on track, Western firms continue to outsource jobs to the Philippines, overseas Filipinos are in a buying binge, and interest rates are still on a downtrend. Never have the stars been this aligned and investors this bullish about a country once known as the “sick man of Asia.”

But Jaime E. Ysmael is not one to be swept by all the euphoria.

As Chief Finance Officer, Group Head of the Finance Group and Compliance Officer of Ayala Land, Inc. (ALI), the country’s largest, most diversified and fully integrated property developer, his role demands a lot of patience and looking into the horizon. Land banking, after all, is the practice of buying raw land, holding on to and priming it until the time is ripe for selling and taking a profit.

In this context, Ysmael has mastered the art of riding the tide.

“At the end of the day, I believe it is how we manage challenges and risks and how we take advantage of the opportunities which will spell the success or failure of the enterprise – in this case, not only of the company, but of our own professional and personal well-being as well,” he said when he was named last year’s “ING FINEX CFO of the Year.”

Ysmael joined an elite circle of CFOs that counts Delfin Gonzalez, Jr., who won when he was CFO of Globe Telecom; Sherisa Nuesa, who got the award when she was CFO of Manila Water Company; Jose Sio of SM Investments Corp.; and Ysmael Baysa of Jollibee Foods Corp.

Patient growth

“Much like in my current post as a CFO,” Ysmael said his life story has also “been characterized by a lot of challenges and opportunities.”

From an accountant pulling long hours behind his desk at SGV & Co. to being ALI’s chief finance officer with veto power on most decisions at a company with a money purse of nearly US$1 billion for capital expansion, it has been a long journey indeed for Ysmael – one that took him from the flood-prone streets of España Avenue to España (the country) and several parts of the world.

The eldest son of a micro-entrepreneur and a teacher, Ysmael depended on his academic brilliance to get to college. With the stipends from scholarships, he graduated Summa Cum Laude from the University of the East with a degree of Bachelor of Science in Business Administration, Major in Accounting. He was also a placer at the CPA board exam and was instantly invited to join the country’s biggest auditing firm.

It was SGV that gave him his first big break: a scholarship at the University of Pennsylvania where he earned an MBA degree (Major in Finance) from The Wharton School, and a Master of Arts degree in International Studies (Concentration in Latin America) at the School of Arts and Sciences of the University of Pennsylvania, as a Fellow of the Joseph H. Lauder Institute of Management and International Studies.

The twin scholarships sent him off to a mission that changed the way he saw the world and dramatically transformed his outlook as a professional.

In Mexico, where he spent the summer on a language and cultural immersion program, Ysmael lived with a Mexican family who spoke very little English. For his internship, he spent three months working at Rosario Dominicana, a gold and silver mining company that was also part of the conglomerate which owned the largest producer of rum in the Dominican Republic. Aside from the art of doing business internationally, he also learned to speak fluent Spanish.

These came in handy when he joined the Ayala Corp., which gave him the chance to get involved in its international business ventures, including financial oversight of its investment in a venture capital firm based in Madrid. “I found myself applying my Spanish language skills and international business exposure in undertaking the performance management function at several companies in Spain.”

His exposure to the global setting was further enhanced when he spent a year as senior audit manager at the Baltimore, Maryland office of Arthur Andersen & Co. and served as faculty at its St. Charles, Illinois center for continuing professional education. “This international experience in various aspects of business turned out to be an excellent professional development opportunity and a huge confidence booster,” he said.

From global to local

When he finally joined the Ayala Group, bringing with him these rich global experiences, Ysmael said he became “a well-rounded finance professional who not only knows how to operate in a complex operating environment,” but also one who can make a difference.

“My years of experience working side-by-side with top-notch Ayala executives, particularly in the Strategic Planning Group, prepared me for my next assignment at Ayala Land,” he added.

Being CFO of Ayala Land, which has over P300 billion in market capitalization and more than 100 subsidiaries and affiliates, is far from a “plain vanilla” role. Beyond the traditional finance function which covers accounting, planning and control, treasury, audit, tax and investor relations, Ysmael also oversees other areas such as risk management, project control, business information systems and supply chain management. He also wears other hats, including being the compliance officer, chairman and chief executive officer of the accounting shared service subsidiary which he formed. Alongside these, he is also a member and chairman of various management sub-committees, and member of the board of directors of various subsidiaries and affiliates.

Ysmael considers the 1997 Asian financial crisis as his most daunting challenge as CFO of the country’s biggest property firm. “Things really slowed. There were property bubbles all around. Fortunately, we at Ayala Land maintained a strong balance sheet, had minimal debt, and kept our conservative stance so we were able to weather the crisis pretty well,” he added.

More opportunities

One lesson that the company learned from the 1997 episode is to diversify and broaden its reach to cover the larger and more resilient lower middle-class segment of the market. From a builder of high-end residential projects, Ayala Land is now being known as a “developer for all people,” introducing brands and products that serve all income segments.

“The economic pie is getting bigger. We are seeing a growing middle class in the Philippines, and this is driving the demand for residential units. As interest rates continue to go down, it will become more affordable to buy a home. This is not another bubble; there is real demand,” Ysmael stressed.

ALI is now changing the Philippine skyline with major projects such as the P30-billion urban hub One Bonifacio High Street in Bonifacio Global City, and the P65-billion Vertis North, envisioned as the central business district in Quezon City. Just last week, the company won the government bidding for the FTI complex in Taguig City, a 74-hectare property, which it envisions as the “southern gateway” to Metro Manila.

This came on the heels of ALI’s successful overnight equity top-up placement where it raised P13.6 billion to finance its additional unbudgeted capital expenditure, primarily earmarked for additional land banking.

The deal is considered the biggest overnight placement for a company in the Philippines and for the entire region since 2005, but ALI’s CFO is not going around town in a buying spree. He knows that his role as a CFO calls for finding the delicate balance between the accelerator and the brake. This is after all the key to Ayala Land’s sustainability as a business enterprise, he said.