Ayala Land allots P100B for 2015 capex plan

Property giant Ayala Land Inc. has earmarked a record-high P100 billion for capital spending this 2015 to support an aggressive expansion program.

The P16-billion fresh capital-raising program completed by ALI last Friday was in line with its “2020 vision”—a program to grow business by 20 percent annually over the next six years, with the end-goal of breaching a net profit of P40 billion by the year 2020.

ALI’s controlling shareholder Ayala Corp. placed out 484.85 million common shares at P33 each through a “top-up” placement, allowing all the proceeds to flow into the company in support of the P100-billion capital spending this year.

“This P16-billion placement represents a landmark transaction for us as it is the single-largest capital-raising exercise in the 23 years that Ayala Land has been a listed company. The funds generated will support our aggressive growth trajectory as declared in our 2020 vision,” ALI president Bernard Vincent Dy disclosed to the Philippine Stock Exchange Monday.

In a text message, ALI chief finance officer Jaime Ysmael said the planned capital expenditure of P100 billion for 2015 was the largest so far in the property developer’s history. “Around 43 percent will be spent for development projects, 32 percent for land acquisition and 25 percent for investment properties. This is consistent with our investment program to attain our 2020 vision,” he said.

The capital spending budget for 2015 is 42.8 percent bigger than ALI’s estimated full-year disbursement of about P70 billion in the previous year.

Under the “top-up” structure, Ayala Corp. lent some of its shares in ALI for sale to new investors for a quicker equity deal but it will subscribe to the same number of shares at the same price in the future. As a result of this transaction, the holdings of the parent conglomerate in ALI will be reduced to 47.3 percent from 48.9 percent but will retain voting control over 68.9 percent of the property firm.

“This equity placement will help Ayala Land pursue its growth plans and achieve its long-term strategy. We remain committed and supportive of Ayala Land and continue to believe that it is a key component of our portfolio and an important driver of growth at Ayala Corp.,” company chair and chief executive Jaime Augusto Zobel said.

UBS AG acted as the sole bookrunner of the placement with Goldman Sachs (Asia) LLC as co-lead manager and BPI Capital Corp. as domestic co-bookrunner.

“ALI picked a perfect window to open the equity capital markets for the Philippines in 2015. The after-market performance post-issuance is a clear reflection of the high quality of oversubscribed demand it attracted in the placement,” said UBS Philippines managing director Lauro Baja.

The transaction saw strong investor participation from global institutional investors, with the deal size being oversubscribed by several times. About 90 percent of the demand was generated by foreign investors and existing long-term shareholders. Sixty-seven percent of demand for the shares came from Asia, 21 percent from Europe, 11 percent from the Philippines and 1 percent from the United States, Baja said.