Ayala to beef up exposure in banking sector

MANILA, Philippines - The board of Ayala Corp. (AC) has approved a plan to increase its exposure in the banking sector and declare cash dividends.

In a regulatory filing, the country’s oldest conglomerate said it also secured board approval for further fundraising and acquisitions.

Following a regular board meeting, AC said its board allowed management’s “participation in the stock rights offering of Bank of the Philippine Islands (BPI).”

BPI is raising P25 billion in fresh funds through a stock rights offering to finance its expansion program and further strengthen its capital base. The bank management has yet to approve the final terms and conditions of the rights offer, including the final issue size entitlement ratio, offer price, record date, appointment of the parties and other terms.

The board also gave its formal consent for the “re-issuance and offering of 20 million preferred B shares and acquisition of 20-percent ownership interest in Ayala DBS Holdings Inc.”

Last month, AC and Singapore-based fund manager GIC Private Ltd. bought the remaining shares of DBS Bank Ltd. in BPI for P29.6 billion. Specifically, GIC and Ayala have acquired DBS Bank’s remaining interest in Ayala DBS Holdings Inc., which is equivalent to a 9.9-percent indirect ownership in BPI.

For the fundraising program, AC last month raised P10 billion from the re-issuance of 20 million preferred B shares at P500 apiece.

“The proceeds shall be used to partially refinance certain denominated debt obligations due in the last quarter of 2013 totaling P10.25 billion,” AC earlier said, adding that the balance will be funded by other credit facilities.

The board also committed to pay a quarterly cash dividend of P6.5625 for every preferred B share.

Given its profitable performance, the conglomerate is also handing out almost P1.5 billion in cash dividends.

AC stockholders as of Dec. 19 will receive P2.40 per share on Jan. 3, 2014, with total cash dividends hitting P1.43 billion.

In January to September, this year, AC’s profits of AC jumped 20 percent to P10.4 billion from a year ago driven by its banking and real estate businesses.

Without the impact of the accelerated depreciation as a result of the network modernization of Globe Telecom core net income picked up at an even higher rate of 32 percent to P12.3 billion.

AC is mainly  into real estate (Ayala Land Inc.), banking (BPI), telecommunications (Globe), utilities (Manila Water Co. Inc.) and electronics (Integrated Microelectronics Inc.).

For this year, AC allotted P135 billion in capital expenditures to bankroll investment programs in the property, telecommunications and water businesses. It will also support investments in the power and transport infrastructure sectors.