YANGON, Myanmar- Ayala buys into Pun’s listed companies for $238M

Ayala, with investments in real estate, telecommunications, energy and infrastructure, will acquire stakes in Singapore-listed Yoma Strategic Holdings and Yangon-listed First Myanmar Investment, becoming the second-largest shareholder in both.

The deal, announced on Thursday, will be worth $238 million in total and values the two companies at about $1 billion combined. Both sides said it was the Philippines’ biggest private investment in Myanmar.

The deal involves share issues of S$0.45 (US$0.33) per share by Yoma Strategic and K15,000 (US$9.90) by FMI, representing a premium of 37.7pc and 36.5pc over the average traded price on November 12 and 13 respectively.

Ayala president and chief operating officer Fernando Zobel de Ayala will sit on the boards of the two companies.

“This partnership reflects Ayala’s faith in the future of Myanmar and validates the Yoma Group’s business model in the country,” said Mr Pun, who chairs both Yoma Strategic and FMI.

The Philippine conglomerate’s chair and CEO Jaime Augusto Zobel de Ayala said the investment “gives Ayala a unique opportunity to participate in Myanmar’s growth story.”

The deal represents the first major foreign investment in a company listed on the Yangon Stock Exchange since Myanmar’s securities commission announced in July that non-Myanmar individuals and entities would be permitted to acquire up to 35pc of listed firms.

Ayala will provide a $82.5 million convertible loan to FMI allowing it to take an equity holding of up to 20pc.

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FMI chief operating officer Tun Tun said the pair are “looking towards” converting the loan into equity “within the shortest practical time period.” The conversion will result in allocating 20pc of the enlarged FMI shares to Ayala at a price of K15,000 per share.

The transaction will set the benchmark for Myanmar companies with regards to new avenues to raise and receive foreign capital following the new Myanmar Companies Law, he added. “It is indeed a milestone for both FMI and the development of the Myanmar capital markets in the ability to bring in foreign capital to Myanmar companies.”

Last month, the two sides announced plans for a 50-50 joint venture – owned by Yoma and Ayala subsidiary AC Energy – to build projects adding 200 megawatts by investing $30 million into Yoma Micro Power.

The Pun companies, which have come under pressure from heavy exposure to the Yangon real estate market and delays in its flagship investment Yoma Central, needed to attract new capital, analysts say.

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This is the second major injection of capital this year. Yoma raised $70 million early in 2019 from Thai institutional investors in the first foray by a Myanmar-focused company into the corporate bond market

FMI is consistently ranked among the most transparent companies in Myanmar, having the second highest transparency scores in the 2019 Pwint Thit Sa report out of 104 companies.

Melvyn Pun, CEO of Yoma Strategic and son of Serge Pun, told the Financial Times that they had known the Ayala family for more than a decade and that their “reputation is pristine”. “That’s why this partnership made a lot of sense: we value our reputation very highly,” he said.

Yoma Group runs a diversified portfolio of businesses in real estate, consumer, automotive and banking, partnering with the likes of Yum Brands Inc and Mitsubishi Motors Corp. Earlier this year, Yoma Bank became the first bank in Myanmar with a foreign stakeholder following a decision by the International Finance Corporation to convert a $5 million loan into a 5pc equity shareholding./ THOMPSON CHAU

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