Khazanah buys 8% stake in Philippines' mass housing developer for RM215mil

  • Property
  • Wednesday, 30 Apr 2014

PETALING JAYA: Khazanah Nasional Bhd has agreed to be a cornerstone investor in Philippine-listed mass housing developer 8990 Holdings Inc, paying 2.93bil pesos (RM215mil) for an 8% stake. This is its first investment into a Filipino company.

The sovereign wealth fund said it had signed a cornerstone investment agreement, via special purpose vehicle Pasir Salak Investments Ltd, for 8990’s upcoming follow-on share offering.

According to Khazanah, 8990 Holdings caters to the low-income group with homes priced between RM33,000 and RM92,000 in districts such as Cebu, Davao, Iloilo, Cavite and Pampanga.

8990 Holdings was currently a “leading developer” in the under-served mass-housing segment, having sold over 26,000 units from completed and on-going projects, Khazanah said.

“With an established track record, 8990 Holdings is well positioned to address current shortage of affordable housing in the Philippines through providing innovative solutions that meet the needs of the lower income market by combining fast turnaround construction methods, affordable financing programmes and comprehensive subdivision management.

“It also provides a potential avenue to foster know-how sharing that could benefit affordable housing development in Malaysia and more broadly in the region,” Khazanah added in a statement on Monday.

Foreign news reports said the Securities and Exchange Commission of the Philippines had approved 8990 Holdings’ 17.5 billion pesos follow-on share sale on April 21.

The offering totalled 1.38 billion shares at 12.70 pesos (93 sen) apiece, with 802.19 million common shares and 382.36 million secondary shares. There is an over-allotment option of 134.95 million shares.

The final price was fixed yesterday. The follow-on shares are to be listed on May 14.

Net proceeds from the sale of primary shares, which amount to 10.66 billion pesos, would be used to pay down existing borrowings.

8990 Holdings said it had incurred “significant expenditure” to acquire land for development, complete existing projects and commence development of new mass housing projects.

“To partially fund these activities, the company obtained and secured financing, payment for which it intends to partially be funded from the net proceeds of the primary offer,” it was quoted as saying last week in the Manila Standard Today.

At least 70%, or 871.182 million, of the offer shares had been earmarked for overseas investors, and the remaining 30% for domestic investors.

The selling shareholders included Luis Yu Jr, Mariano Martinez Jr and Jesus Atencio III. Yu is a director and Martinez the company chair.

8990 Holdings had appointed UBS as the sole global coordinator, international bookrunner and lead manager, and UBS Investments Philippines Inc and SB Capital as domestic lead underwriters.

8990 Holdings, which was backdoor-listed via IP Converge Data Center Inc, operates under the brand names Deca Homes for horizontal developments and Urban Homes for medium-rise buildings.

The company had reportedly completed 16 mass housing projects consisting of 14,000 units as of end-2013 and is currently developing eight more projects across five cities.

For the financial year ended Dec 31, 2013, the Makati-based firm posted net income of 2.18bil pesos on revenue of 5.36bil pesos, which translates to a net margin of 41%.

As at press time, 8990 Holdings was trading at 6.90 pesos, down 1.29% for the year, and only 1.24 times earnings.

Its market capitalisation stood at 32.13bil pesos with a share base of 4.66 billion shares, according to Bloomberg data.

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