Builder of ‘premium affordable’ homes readies P2-B IPO
Ovialand Inc. is gearing for a P2-billion initial public offering (IPO) by the middle of 2023 after a successful bet on a niche mass housing segment nine years ago transformed the builder into a leader in “premium affordable” homes.
Ovialand CEO Marie Leonore Fatima Olivares-Vital, part of the family-owned corporation’s second-generation, said they were ready to file their IPO application in the next few weeks.
Their goal was to take their thriving business that started in Southern Luzon to become a nationwide player by 2030.
“The banks are not able to support us as fast as we’d like to go,” Olivares-Vital told the Inquirer in an interview.
The developer hired Security Bank’s SB Capital Investment Corp. as sole deal arranger for the public offering, which was upsized from the original amount of about P1.5 billion.
The IPO will help Ovialand rapidly scale its business, which follows a more capital-intensive model since they pay the development costs upfront instead of relying on down payments. This allows them to maintain strict high quality standards while building houses faster.
Each home, built using solid concrete and is fully finished upon turnover, takes about 45 days to complete. Buyers are also assigned an account officer to personally assist them with their home financing.
The developer, which started as a builder of socialized housing in the 1980s before shifting to the more upscale affordable segment in 2014, has so far sold nearly 2,000 homes priced between P2 million to P4 million in southern Luzon markets such as Laguna and Quezon. Net income in 2022 grew about 20 percent to P300 million while revenues reached P1.4 billion, up 60 percent.
“Because the product is so good and we’re the only ones building it, we really want to be able to replicate it and take it far and wide fast so we always knew the [equity] fundraising was imminent,” Olivares-Vital said.
John Bryan Vital, chief finance officer at Ovialand, said the company’s enlarged equity after the IPO would also allow them to tap more bank financing to support expansion.
“There is more elbow room for debt, we can double to triple our capacity,” he told the Inquirer.
The company’s bullish outlook stands out in an industry weighed down by worries that rising interest rates would hurt demand.
But Olivares-Vital said their prospects were anchored on the country’ massive housing backlog of at least six million homes—an estimated 10 percent falling within the premium affordable home category that Ovialand is pioneering.
The global health crisis also provided an unexpected demand push as employee and families in urban centers relocated to their communities after the work-from-home trend gained traction.
Apart from local home buyers, the company relies on overseas Filipino workers for 20 to 30 percent of sales, Olivares-Vital said.
Three years ago, Ovialand won a strategic investment from businessman and mass housing veteran Januario Jesus Gregorio Atencio III.
Olivares-Vital said most of the IPO will involve the sale of primary shares to double its land bank to nearly 80 hectares in southern and central Luzon and finance project development costs.
She said Atencio will sell a “small” portion of his roughly 20 percent stake in the company during the IPO but will remain on their board of directors as a key advisor and mentor. INQ