Tycoon George Ty-led conglomerate GT Capital Holdings Inc. has struck a deal to buy into affordable housing developer Property Company of Friends Inc. (PCFI), the key operating unit of the Profriends Group Inc.
GT Capital announced on Friday a deal to buy an initial 22.68 percent of PCFI for P7.24 billion, with an option to increase its stake to 51 percent within the next three years. PCFI is valued at P32 billion, almost nine times the company’s net income of P3.61 billion last year.
PCFI is a key subsidiary of Profriends, which planned to raise P7.7 billion through an initial public offering (IPO).
“We view this acquisition as a mutually-beneficial partnership for both parties. Profriends has the product expertise and the strategic land bank, while GT Capital has the financial resources and access to capital. Our partnership adds a new dimension to GT Capital’s property development portfolio and will enable our group to be one of the market leaders in the low-cost housing sector,” GT Capital chair Francisco Sebastian said in a press statement.
“This investment complements Federal Land’s property development projects and expands our group’s presence in the property market. The GT Capital group will now offer Federal Land’s upper-mid to high-end vertical projects and PCFI’s low-cost horizontal and mixed-use townships in key areas near Metro Manila. Our strategic tie-up will thus be a fusion of all property sub-segments,” Federal Land president Alfred Ty said.
Federal Land is the real estate arm of GT Capital, which is also into the business of banking, automotive assembly, importation, dealership and financing, power generation, and insurance.
This deal confirms market talks from the last few months that Profriends, which had taken initial steps to go public, may sell shares to a taipan.
“The low-cost housing segment is the real sweet spot in the country’s property sector, with a supply shortage of over three million homes, which continues to grow annually. Our partnership with GT Capital will strengthen our ability to be a leading player in serving this urgent market need. Moreover, the potential synergies of working with other component companies in the GT Capital group will enable us to offer our live, work, learn, play, and worship estates to many more middle income Filipino families,” said Profriends chair Guillermo Choa.
Established in 1999, Profriends serves the low-cost and economic housing segments and likewise has retail and office space leasing portfolio. It has built and sold over 36,000 affordable homes in the provinces of Cavite and Iloilo. Its flagship and largest project is Lancaster New City, which spans the areas of Kawit, Imus, and General Trias in the Cavite Province.
Profriends, which sells residential units between P800,000 and P3 million, sees sustained demand from first-time home-buyers such as young professionals, people renting space in the inner city, province-based buyers, and overseas Filipino workers.