Ayala Corp said to eye $324 mil investment for 20% stake in Pun's Yoma Strategic and FMI, FT reports

Source: The Edge Singapore

M&A

Stanislaus Jude Chan 13/11/2019, 11:53pm


SINGAPORE (Nov 13): Ayala Corporation, one of the oldest and largest conglomerates in the Philippines, is set to invest US$238 million ($324 million) to buy a 20% each in Singapore-listed Yoma Strategic Holdings and Yangon-listed First Myanmar Investment (FMI), according to Financial Times.

Both companies are owned by Myanmar tycoon Serge Pun, the owner of one of Myanmar’s largest conglomerates, Serge Pun & Associates (SPA Group).


In a filing to SGX before market open on Nov 14, Yoma Strategic confirmed Ayala will be investing US$237.5 million in the two companies.


The issue price for the shares is set at 45 cents per share for Yoma Strategic and 15,000 Myanmar kyat ($13.28) per share for FMI.


The issue price represents a premium of 37.7% and 36.5% over the volume weighted average price of the shares traded on Nov 12 and Nov 13, respectively.


“Today marks a new milestone for the Yoma Group. I am extremely pleased and honoured to have Ayala become one of our most important strategic partners. This partnership reflects Ayala’s faith in the future of Myanmar and validates the Yoma Group’s business model in the country,” says Pun, the executive chairman of Yoma Strategic and FMI.


“We look forward to leveraging on the expertise and experience of Ayala to strengthen our existing businesses as well as to explore potential opportunities in Myanmar,” he adds.


The deal, which will mark Ayala’s largest investments outside of the Philippines, will value Pun’s Yoma Strategic and FMI at a combined US$1 billion.


The move comes more than a year after Ayala chief executive Jaime Augusto Zobel de Ayala in April 2018 said he wanted the group to generate as much as 10% of its revenue outside the Philippines. “We have been over-weighted in the Philippines for the past two decades,” Zobel told shareholders.


In May 2018, Zobel was also reported by FT as saying the group was hunting for new water and solar power acquisitions in Southeast Asia, in order to expand beyond its focus on the Philippines’ domestic consumer businesses.


Ayala’s energy platform AC Energy last month established a 50:50 joint venture with Yoma Strategic to drive the growth of Yoma Micro Power (YMP) and explore developing around 200 megawatts of additional renewable energy projects within Myanmar.


AC Energy and Yoma Strategic have signed a binding term sheet for the joint venture to invest at least $30 million into YMP.


“Supply of electricity is one of the largest opportunities in Myanmar and also one of the biggest bottlenecks for economic development,” Melvyn Pun (pictured above), CEO of Yoma Strategic and son of Serge Pun, said in the Oct 14 announcement.


“We are excited to have AC Energy as our partner to drive sustainable and inclusive economic growth,” he added.


According to the FT report on Wednesday, Ayala will take a seat on each of the boards of Yoma Strategic and FMI following the acquisition of the 20% stakes.


However, FT quotes Melvyn Pun as saying the deal was a “strategic partnership” and that Yoma Strategic and FMI did not plan to take a stake in Ayala.


“We always felt that it was important to leverage partnerships with the right skill sets so that we would be a leader in the businesses we run,” he was quoted as saying. “We will be looking to leverage their experience and skills from the Philippines so that we can grow in Myanmar.”


Shares in Yoma Strategic closed flat at 32.5 cents on Wednesday. The counter is trading some 16.7% lower than its recent peak of 39 cents in July.

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