GT Capital raises $222m in block

Philippine conglomerate GT Capital's controlling shareholder raised P9.8 billion ($222 million) from an accelerated share sale on Monday night, taking advantage of rallying domestic markets to launch the placement.

Grand Titan Capital, which is controlled by the family of banking and automobile tycoon George SK Ty, sought to offload 8.715 million shares and raise up to $220 million in the placement under the sole lead of Goldman Sachs.

The shares were on offer between P1,120 and P1,150 per unit, representing a 2.54% to 5.08% discount to the February 2 closing price of P1,180 per share, according to a term sheet seen by FinanceAsia.

Shares priced at P1,130 per share on Monday night, towards the middle of its indicative range and at a tight 4.2% discount to the last close. This price represents a 2.8% premium to the three-month VWAP (volume average weighted price) of Ph1,099 per share, and a 7.1% premium to the six-month VWAP, according to a person involved in the deal.

International investors were keen to buy up shares in GT Capital, which is up 17.25% so far this year up to February 2. Some 75% of the book was made up of foreign investors, while domestic institutions made up the remaining 25%, the person said. Some 85% of investors were long-only institutions, and 15% of the allocations went to hedge funds.

There was substantial demand from Asia-Pacific institutions, although there were also outsized orders from funds in Europe and the US.

The Philippine Stock Exchange Index is up 6.35% year-to-date as investors and analysts forecast that a slump in oil prices will bolster economic growth in the country. Global oil prices have lost more than half their value in seven months, plummeting more than $100 a barrel to less than $46 a barrel mid-January. Despite bumping up to $55 a barrel on February 2 as investors piled in, many remain bearish on crude prices for 2015.

While Malaysia, a net oil exporter, will see a negative impact due to slumping oil prices, net importers such as the Philippines will experience boosts in the economy as consumers will have more incentive to spend money saved at the gas pumps. Large conglomerates such as GT Capital, which is involved in banking, real estate, power generation, auto manufacturing and life insurance, will likely benefit.

Investors were clearly keen on GT Capital, which acts as a proxy for consumer spending in the Philippines and also has a good reputation when it comes to corporate governance. It raised $503 million in its flotation in 2012.

Grand Titan Capital, which is involved in a range of businesses including banking, real estate, power generation, auto manufacturing and life insurance, saw its stake in GT Capital drop to 54% from 59% through the share sale.

It is the third deal in the Philippines this year. JG Summit raised $200 million from its own accelerated top-up of shares on January 22 under the joint leads of CLSA and UBS, while Ayala Land, the Philippine property developer, raised Ps15.8 billion ($350 million) on January 10 under the sole lead of UBS.