SMIC taps into $1-B cash pile for new investments

MANILA, Philippines - With a massive cash pile of around $1 billion, retail tycoon Henry Sy’s SM Investments Corp. (SMIC) is in a strong position to take advantage of any interesting opportunities that may crop up, according to a top company official.

SMIC chief finance officer Jose T. Sio said the holding firm is awash with cash, having raised P15 billion from the recent issuance of seven to 10-year fixed rate bonds. “We’re very liquid. We have like P40 billion plus in cash. Aside from that, we still have an untapped credit line,” he said.

Sio said the group has been looking for fresh uses of its huge cash reserves.

SMIC officials said they are still keen on acquiring a significant stake in the private holding firm that owns the 16-hectare Greenhills shopping complex, which would allow the SM Group to capture the lion’s share of the retail market in the fast-growing Ortigas-Pasig-Mandaluyong area.

The interest remains even as the group led by Ignacio R. Ortigas entered into a strategic alliance with property giant Ayala Land Inc., allowing the latter to participate in the development of the family’s various properties which include large residential, office, retail and hotel components

The Ortigas family exercised its right of first refusal over British banking giant HSBC’s stake in OCLP Holdings Inc. in a deal valued at P11 billion.

Meanwhile, Sio said SMIC may do another fund-raising within the year to take advantage of the country’s bright economic prospects following an upgrade to the Philippines’ sovereign credit standing to a notch below investment grade. “It would probably be a combination of equity and debt,” Sio said.

Proceeds from future cash-raising activities will be used to refinance existing obligations and for investments, Sio said.

He said SMIC sustained its growth traction in the second quarter, mainly due to the country’s strong economic fundamentals. “The second quarter is a little better than the first quarter. Traditionally, the second quarter is stronger than the first because of the summer break and the opening of schools,” he said.

Sio also disclosed that the group, through SM Prime and SM Development Corp., is in talks to buy tracts of land in various areas in China. “The property we’re acquiring should be good for the next three to four years,” he said.

SM Prime chief financial officer Jeffrey Lim earlier said they were looking to acquire five more properties in China to support their aggressive expansion in the world’s second biggest economy.

China is the group’s second biggest market next to the Philippines.

For this year, SMIC has set a capital spending of around P54 billion to continue the expansion of its banking, shopping mall, and real estate businesses. The capital budget is higher than what it spent in 2011.

SMIC owns stakes in mall giant SM Prime Holdings Inc., property firm SM Development Corp., and lenders Banco De Oro Unibank and China Banking Corp.