SMIC eyes consolidation of other operating units

By Neil Jerome C. Morales, The Philippine Star

Posted at Mar 31 2014 08:32 AM | Updated as of Mar 31 2014 04:33 PM

MANILA, Philippines - Mall and banking conglomerate SM Investments Corp. (SMIC) is looking at pursuing a consolidation program for its other operating units, particularly those involved in power and infrastructure.

Consolidating assets into a specific company or group will improve the operating units’ competitiveness while making them more attractive to investors, an executive said.

“The plan is this: we started with property and we want to consolidate also the banking. The other investments, that can also be consolidated,” said SMIC chief financial officer Jose Sio.

This will allow investors to quickly identify investment opportunities in SMIC companies, be it property, gaming, infrastructure or power, Sio said.

However, Sio said the consolidation will not necessarily result in the creation of a new unit.

In May, the conglomerate announced the merger of its real estate businesses, creating the most valuable property firm in Southeast Asia. It merged upscale Tagaytay Highlands developer Highlands Prime Inc., condominium builder SM Development Corp. and private firm SM Land Inc., with mall developer SM Prime Holdings Inc. as the surviving entity.

Sio said SMIC already showcased its consolidation-backed business model through umbrella property firm SM Prime.

Moving forward, the conglomerate is looking at combining its energy-related assets.

SMIC earlier said integrating all energy and mining businesses under a single entity like listed APC Group Inc. is an option but the matter is something the group has yet to look at.

The conglomerate is a significant minority shareholder in Philippines’ largest copper producer Atlas Consolidated Mining Corp. APC, which is undergoing a restructuring program, holds several contracts for geothermal projects.

The SM Group, through private firm All First Equity Holdings, is global oil giant Chevron’s partner for the latter’s geothermal power business in the Philippines. The Sy family, through its partnership with Chevron, is setting its sights on other geothermal development opportunities in Cebu, Bohol, Palawan, Samar, Northern Luzon primarily as Kalinga, as well as in Mindanao, to stake a bigger claim in the local renewable energy sector.

The conglomerate is spending P80 billion this year to support continuous growth of its operating units, up from P65 billion in 2013 and P56 billion in 2012.

Profits of SMIC climbed 11 percent to P27.45 billion in 2013 from P24.67 billion a year ago. Revenues jumped 13 percent to P253.5 billion from P223.9 billion in 2012.