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SM property arm plans share sale worth P10B

Posted on April 06, 2011 10:13:17 PM [ BusinessWorld Online ]

SM DEVELOPMENT Corp., the listed property arm of the Sy-led mall and banking conglomerate, will pursue plans to sell P10 billion worth of shares on the local bourse this year even as the recent decline in the stock market on inflation fears has prompted other firms to rethink public listing, its top executive yesterday said.

“We are still getting proposals [from underwriters]. There will be a stock offering,” Henry C. Sy, Jr. told BusinessWorld in a chance interview.

Asked for the timeline, Mr. Sy said the roll out will be “as early as possible or depending on what is said by the bankers.”

This firms up the developer’s earlier announced plans to sell P5 billion-P10 billion worth of unissued shares in the stock market. The fund-raising scheme will also increase the public float of the company from the current 16% public ownership to around 30%.

The local stock exchange’s performance, however, had fallen by nearly a tenth since January on inflation fears before picking up amid announcements of a mega-deal between two telecommunication firms

The Philippine Stock Exchange index is now just 0.06% down at 4,212.52 from 4,215.21 recorded back on Jan. 3.

Already, this market decline has prompted DMCI Project Developers, Inc. to shelve plans to sell P10 billion worth of shares on the local bourse via an initial public offering, according to earlier reports.

The fresh funds will be used by SM Development to acquire land in urban areas including Metro Manila, Mr. Sy said.

“We have internally generated [cash],” Mr. Sy said, claiming good results from the sale of condominium units last year.

An uptick in demand in the property sector pushed profits of listed SM Development to rise by 62% to a record P3 billion last year. This year, the company expects to surpass the record 10,000 units sold last year and 4,892 residential units sold in 2009 that will push profits to more than P4 billion this year.

“[But] we could achieve even more if we can have more money,” he added.

The domestic portion of the share sale will be handled by sister company BDO Capital and Investment Corp. while a foreign underwriter has yet to be appointed.

“The market of real estate has expanded very much so both indications are good and we are really progressing,” Mr. Sy said.

Last year, SM Development raised a total of P11.7 billion from a one-for-three stock rights offering and P10 billion from corporate notes.

“Fundamentally, SM Development had been able to show up that it could weather any crisis and the confidence of investors is there,” Astro C. del Castillo, managing director of brokerage firm First Grade Holdings, Inc., said in a phone interview yesterday.

“I have no doubt that they will not have difficulties [in raising funds],” Mr. del Castillo said.

Shares in the property firm -- which has 14 projects in its portfolio and has lined up 10 projects this year worth up to P20 billion -- rose by 56 centavos to P8.46 each

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