AYALA CORP. (AC) is investing up to $237.5 million in Myanmar’s Yoma Group, marking the biggest investment by a Philippine company in Myanmar.
AC announced the landmark deal in a statement yesterday, where it said it is taking a 20% stake in both of Yoma’s holding companies — Yoma Strategic Holdings Ltd. and First Myanmar Investment Public Co. Ltd.
Yoma Strategic is listed in Singapore and has interests in property development, construction & piling services, project management and design services.
First Myanmar Investment, on the other hand, is listed in Myanmar and is in the business of financial services, healthcare, real estate and tourism.
AC will become the second-largest shareholder of these two companies, after the Pun family. AC President and Chief Operating Officer Fernando Zobel de Ayala will be nominated to the board of the two companies.
AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala said the partnership with the Yoma Group gives the Philippines’ oldest conglomerate a chance to ride on Myanmar’s growth trajectory.
“We have always believed that ASEAN has massive potential to reap the benefits of Asia’s rise in the global economy. Ayala can definitely move closer to this aspiration by working with a respected and diversified conglomerate in the region,” he said in the statement.
Last month, AC’s power unit AC Energy, Inc. announced plans to form a 50-50 joint venture with Yoma Strategic to develop around 200 megawatts (MW) of renewable energy in Myanmar.
Once finalized by next year, the joint venture is looking to hold at least a 50% stake in Yoma Micro Power (S) Pte. Ltd., a micro power plant and mini-grids builder in Myanmar.
AC said it is keen on tapping Myanmar’s “under-penetrated market” which has been recording a gross domestic product (GDP) growth of more than 6% year-on-year over the past three years. Myanmar’s location — sitting between India and China — is also a factor.
“We are confident that by leveraging our own capabilities and experiences over the last 185 years, Ayala’s partnership with the Yoma Group could certainly help improve the lives of people in Myanmar through purposeful business,” AC President and Chief Operating Officer Fernando Zobel de Ayala said in the statement.
Yoma, chaired by tycoon Serge Pun, has expanded beyond real estate by partnering international companies entering Myanmar. It holds the KFC franchise from Yum Brands Inc and has a joint venture with Mitsubishi Motors Corp. to distribute the Japanese automaker’s vehicles.
“This partnership reflects Ayala’s faith in the future of Myanmar,” Mr. Pun, executive chairman of both FMI and Yoma Strategic, said in the statement.
Earlier on Thursday, Yoma Strategic reported a net loss of $44.2 million its the second quarter through September, versus a profit of $18.8 million a year earlier.
AC posted an attributable net income of P46.16 billion in the first nine months of the year, almost double from last year, due to higher returns from its power, banking and telecommunications units. — Denise A. Valdez with report from Reuters