UPDATE: Ayala Corp to take 20 percent stake in Yoma Strategic and First Myanmar Investment

Philippine 50-peso notesPhilippine 50-peso notes

This article was originally published on Thursday, 14 November 2019 at 9:23 A.M. SGT; it has since been updated with more details.

Ayala Corp. will invest up to US$237.5 million to take an up to 20 percent stake in each of Yoma Strategic and its affiliated company, Yangon-listed First Myanmar Investment (FMI), Yoma Strategic said in a filing to SGX Thursday.

The investment will make Ayala the second-largest shareholder of both companies, and the Philippine company will nominate Fernando Zobel de Ayala to the board of both companies, Yoma said.

Under the deal, Yoma will issue up to 474.68 million shares to Ayala for up to US$155 million, representing 20 percent of Yoma’s enlarged share capital, the filing said.

The issuance will be in two tranches: An initial 332.50 million shares, or 14.9 percent of the enlarged capital by end-November, with Yoma to seek shareholder approval for the remaining 142.18 million shares, the filing said.

Ayala will also provide a US$82.5 million convertible loan to FMI, which can be converted to up to a 20 percent equity shareholding in the Yangon-listed company, Yoma said.

Issue price at significant premium

The issue price for the shares in the two companies is set at S$0.45 a share for Yoma Strategic and 15,000 kyat a share for FMI, marking a premium of 37.7 percent and 36.5 percent, respectively, over the volume weighted average price of the shares traded on 12 November and 13 November, the filing said.

“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,” Serge Pun, executive chairman of both Yoma Strategic and FMI, said in the statement.

“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 added.

The proceeds of the placement shares will be used to fund the growth and expansion of the group’s businesses, with 50 percent to 70 percent earmarked for the real estate division and 15 percent to 25 percent set to be used to refinance existing indebtedness and 15 percent to 25 percent for general corporate purposes.

Not more than 5 percent of the proceeds will be used for investments in the financial services businesses and not more than 5 percent will be used for investments in consumer businesses, including capital expenditure for store expansions and potential new food and beverage investments, Yoma said.

Philippines’ largest FDI into Myanmar

The deal marks the largest foreign direct investment made by the Philippines private sector into Myanmar, the filing said.

Yoma noted Myanmar’s stock exchange announced foreign entities can now hold up to 35 percent of Myanmar-listed companies.

“This is the first major foreign investment into a YSX-listed company. FMI and Ayala are looking towards converting this convertible loan into equity within the shortest practical time period,” Tun Tun, chief operating officer of FMI, said in the statement.

“The transaction will set the benchmark for Myanmar companies with regards to new avenues to raise and receive foreign capital following the regulatory liberalization set by the new Myanmar Companies Law 2017,” Tun Tun said.

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