Corporate News

By Krista A. M. Montealegre, Senior Reporter

SM Investments’ capex 40% funded by debt

Posted on March 27, 2015

SM Investments Corp., the holding company for the business empire of the country’s richest man Henry Sy, Sr., is taking on fresh debt to fund its higher capital expenditure (capex) budget for the year, its chief financial officer said.

JOSE T. SIO, chief financial officer of SM Investments Corp., told reporters on Wednesday that the Henry Sy-led conglomerate would fund about a third of its P85-billion capital spending plan this year through borrowing from the domestic market. -- BW FILE PHOTO
The conglomerate is spending P85 billion this year, higher than the earlier estimate of P80 billion, SM Chief Financial Officer Jose T. Sio told reporters last Wednesday.

“Usually a third or 40% of that [capex] will be outside sources, mostly debt,” Mr. Sio said, noting that SM may secure it from the local market.

SM has yet to decide on the timing of the fund-raising activity.

“As soon as the right time [comes] -- there is liquidity, low interest rates -- we go,” the company official said.

“Now, we don’t go out because we need funds. We go out because it’s an opportunity.”

Luis A. Limlingan, business development head at Regina Capital Development Corp., said the plan of SM to finance large-scale investments through borrowing makes sense since the “cost of debt is cheaper nowadays.”

“Rates are going high so might as well maximize it,” Mr. Limlingan said in a phone interview.

The business empire of the 90-year-old Mr. Sy, who placed 73rd in Forbes’ exclusive billionaires’ club and no. 1 wealthiest in the Philippines for 2015, spans banking, property development, retail and more recently integrated resorts.

SM chalked up record earnings of P28.4 billion in 2014, up 3.65% from P27.4 billion a year earlier. The conglomerate stayed on the growth track despite the lack of hefty trading gains enjoyed by its banking business a year earlier.

Its shares added 0.06% or 50 centavos to end at P888.50 each yesterday.