By Neil
Jerome C. Morales (The Philippine Star) | Updated April 15, 2013
MANILA,
Philippines - Mall and banking conglomerate SM Investments Corp. (SMIC) has
finalized its decision to buy into the Waltermart Group of Companies, a top
company official said.
SMIC chief
finance officer Jose Sio said the group of retail tycoon Henry Sy is wrapping
up its due diligence for the 50-50 partnership with Waltermart which is
expected to beef up SMIC’s bottom line.
“We are
proceeding with the investment for Waltermart,” Sio said in an interview.
He said SMIC,
which would buy into Waltermart for an undisclosed amount, finds the location
of Waltermart malls attractive.
In January,
SMIC, through its mall developer SM Prime Holdings Inc. and supermarket firm SM
Retail Inc. entered into a joint venture with Waltermart. SMIC then began a
six-month due diligence.
Sio said the
due diligence, which is already close to completion, is showing good results so
far.
SMIC vice
chairperson Teresita Sy-Coson earlier said that the conglomerate and its units
would not take over the management and business of Waltermart. Instead, the
50-50 partnership would allow for the
expansion of Waltermart malls and
supermarkets.
“This year it
will contribute [to SMIC’s bottom line] but we hope we can increase the
contribution [over time],” Sio said.
Earnings of
SMIC jumped 16.5 percent to a record P24.7 billion last year on the back of
continuous growth in consumer spending.
The conglomerate
is seen to benefit from the market reach of Waltermart whose branches are
located in the outskirts of Metro Manila.
Waltermart
operates 17 shopping centers across Metro Manila and northern Luzon.
To date,
there are around 20,000 tenants in SM malls around the country. For every
tenant slot, four entrepreneurs are in line to secure that spot, Sio said.
Last year, SM
Retail added 34 new stores composed of five SM department stores, four SM
Supermarkets, seven SM Hypermarkets and 18 SaveMore stores. To date, the group
now has a total of 202 stores.
SM Prime, for
its part, is opening this year the SM Aura Premier in Taguig City and SM
Cauayan in Isabela while SM Megamall would be expanded with the construction of
Building D.
By the end of
the year, SM Prime would have 48 malls in the Philippines and five in China
with an estimated combined gross floor area of 6.7 million square meters.
Consumer-related
businesses, particularly shopping centers and supermarkets are expanding their
portfolio, driven by continuous growth in the consumption-driven Philippine
economy.
Lucio Co-led
grocery chain Puregold Price Club Inc., for instance, is branching out in
Mindanao with the opening of its flagship store in Cagayan de Oro and an
S&R Membership Club in Davao as part of plans to hit 200 stores before
2015.
Other major
players in the malls and supermarket segments like Gokongwei-led Robinsons Land
Corp. and Ayala Land Inc. have likewise programmed expansion projects.
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