Ayala Land, Ortigas group seal P15B deal


Posted at Jun 29 2012 09:18 PM | Updated as of Jun 30 2012 05:18 AM

MANILA, Philippines (1st UPDATE) - Ayala Land Inc. (ALI) has sealed a P15-billion peso deal with a group led by Ignacio Ortigas for the development of the Ortigas family's land bank areas, including the Greenhills Shopping Center and Tiendesitas.

This, after the Ortigas group - or at least part of the family - blocked Henry Sy's attempt to take over one of the country's oldest real estate companies.

The Ortigas family consolidated its interest in their holding company by buying a 34 percent stake held by British banking giant HSBC, matching an earlier offer by Sy's SM Group.

The buyout of HSBC's stake gave the Ortigases time to think about their options while property giants SM and the Ayala groups wrestled for control of the urban property developer.

ALI said the deal will allow them to expand their list of business districts that already counts Makati, Quezon City and Bonifacio Global City.

"The partnership... was forged upon the invitation of the Ignacio R. Ortigas group," Ayala Land said in a press statement.

"We are privileged to be a part of this strategic alliance. We welcome the opportunity to participate in the development of these key areas in Metro Manila," ALI President Antonino T. Aquino said.  "Many of our successful developments such as the Ayala Alabang, Cebu Park District, Bonifacio Global City, Trinoma, Nuvali, Abreeza Davao, and Centrio Cagayan de Oro were built on strong partnerships with various groups."

Ortigas & Company currently owns strategic land bank areas in the Ortigas Business District, Greenhills Shopping Center, Tiendesitas in Frontera Verde, Circulo Verde, and Capitol Commons. 

PSE disclosure

In an earlier disclosure to the Philippine Stock Exchange on Friday, ALI said it had obtained authority from the board to negotiate and enter into a strategic alliance with the group led by Ignacio Ortigas for the purpose of allowing ALI to participate in OCLP Holdings Inc., the parent company of Ortigas & Co Ltd.

ALI said it had allocated an initial amount of P15 billion for this partnership and in the development of various properties and businesses.

"This opportunity comes with the invitation of the group of Mr. Ortigas and is in line with the company's expansion plan," the disclosure said.

It was earlier reported in that some Ortigas family members have started talking to the Ayalas, who are likewise of Spanish descent, to foil the entry of the SM group.

Strategic alliance

ALI said: "The strategic alliance is consistent with Ayala Land's thrust of expanding its operations to other areas within and outside Metro Manila through partnerships."

"Our company intends to contribute its expertise in building large scale mixed use developments to this partnership. This development project includes plans for residential, office, retail and hotel components," ALI said.

The Ortigas family members who bought the stake from HSBC - erstwhile the single biggest stockholder in the company - can not divest their stake under a lock-up period. But the deal effectively consolidated a controlling interest within the family which made it easier to sell an enlarged stake to a new investor.

"The existing stockholders which consist primarily of the Ortigas groups exercised their right of first refusal on HSBC shares on Ortigas Holdings Inc.," SM Investments Corp. Cora Guidote said in a text message Thursday night.

Banking sources confirmed that payment to the stake was paid to HSBC as of Thursday.

It was earlier reported that while certain factions within the Ortigas family were willing to take in SM Investment Corp. as a new investor while some preferred the Ayalas instead.

Industry sources said family members from both factions jointly out up funding to buy out HSBC's stake.

Ortigas Holdings was created when Ortigas & Co. Ltd. was converted from a limited partnership into a corporate entity, a restructuring that paves the way for the entry of a new investor, a stock debut or both. It had taken some time for the Ortigas holding firm to take this corporate route because of the diverse ownership, the old partnership being a very old entity whose shares of stocks had been passed on from one generation to another.

A key urban developer, Ortigas Holdings has 50 hectares of land spanning Quezon City, Pasig, San Juan and Mandaluyong, the crown jewel of which is the 16-hectare Greenhills property complex. Another 40 hectares of prime land can be added to its land bank, which include portions of Camp Crame (10 hectares) and Camp Aguinaldo (30 hectares), which were donated to the government years ago but which it has the right to buy back if the government vacates the area in the future. - with a report from ANC