Ayala raises $350m from top-up placement

The property developer defied rocky market conditions to complete the Philippines' first placement in 2015.
An Ayala shopping mall in Subic Bay, Luzon, in the Philippines
An Ayala shopping mall in Subic Bay, Luzon, in the Philippines

Ayala Land, the Philippine property developer, raised Ps15.8 billion ($350 million) from an accelerated top-up in shares on Friday night, in the middle of the initial price range.

The deal consisted of 480 million primary shares offered at an indicative range of Ps32.75 to Ps33.50 per unit. This represented a discount range of 6.4% to 4.3% to Thursday's closing price of Ps35 per share, according to a term sheet seen by FinanceAsia.

Ayala Land experienced strong demand soon after books opened in spite of a slow start to the year for equity capital markets - Asia ex Japan ECM activity is down 83% in the first week compared with the same week last year.

More than 40 institutional investors placed orders one hour after books opened. A source close to the deal highlighted significant demand from two investors in particular, at Ps33 a share, and, early in the bookbuild, expected shares to price towards the upper half of the range.

"We had large demand coming in from two investors at Ps33," the source told FinanceAsia just after books opened. “I think it will be done at Ps33 or higher but definitely not at the lower end."

Shares finally priced at Ps33 per unit, allowing Ayala Land to secure $350 million from the top-up placement. At Ps33 per unit, this represented a 5.7% discount to Thursday's close.

The final book was made up of over 50 institutional investors, a well-balanced mix of long only institutional investors, hedge funds and sovereign wealth funds, according to a second source. There was decent participation from firms in the US, Europe and Asia, although the second source noted that the book was more skewed towards Asian accounts.

Ayala Land shares are currently trading at 34.69 times 2014 earnings, and are up about 5% so far this year up to January 9. This is reasonably in line with the Philippines Stock Index, which is up 3% year-to-date.

UBS was the sole bookrunner on the transaction.

This placement follows a similar transaction in October 2013, when Ayala Land raised Ps12.2 billion from an enlarged top-up after pricing the deal below the mid-point of the indicative range.

Ayala Land at the time planned to use the proceeds to fund the next phase of development. While the property developer's parent, Ayala Corp, sold some of the shares, all of the proceeds went to Ayala Land.

The 2013 placement reduced Ayala Corp's stake in Ayala Land to 49% from 50.4%, although it retained control with more than 70% of the voting shares.

Ayala Land also raised Ps13.6 billion in a top-up placement in July 2012, with plans to use proceeds to acquire properties and assets. 

Ayala Land recently increased its stake in the owner of TriNoma mall by 5.29% after acquiring a portion of the shares held by two other groups for Ps422.5 million. It brought Ayala's stake in TriNoma to 63.82% from 58.53% in December.

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