SM Investments Said to Tap Banks for Property Merger Plan

SM Investments Corp. (SM), controlled by Philippine billionaire Henry Sy, is working with JPMorgan Chase & Co. (JPM), Macquarie Group Ltd. and BDO Unibank (BDO) Inc. as it considers merging its property units into a single company, said three people with knowledge of the matter.

The businesses may be combined as soon as this year, creating one of the Philippines’ largest companies by market value, said the people, asking not to be named as the information is private. Four publicly traded real-estate companies controlled by the group, including SM Prime Holdings Inc. (SMPH), the nation’s biggest shopping mall operator, have a combined market value of about 480 billion pesos ($11.7 billion), data compiled by Bloomberg show.

Merging the units would give the 88-year-old tycoon a builder topping Ayala Land Inc. (ALI), currently the Philippines’ largest developer, in both sales and market value, according to data compiled by Bloomberg. Ayala, which developed the Makati business district in Manila, said last month that it expects to report record profit this year as it fills a nationwide housing shortage and builds new business districts.

SM said last month that it is considering the creation of a single publicly traded property company. The business will be tax efficient and combine development income and recurring income from properties into a single entity, Henry Sy Jr., Sy’s eldest son and vice chairman of SM Investments, said then.

Richest Man

The company’s real estate ventures also include residential builder SM Development Corp. (SMDC), Highlands Prime Inc. (HP) -- the developer of a mountain resort south of Manila -- and Belle Corp., which is building a casino in the capital.

SM Development rose as much as 3.5 percent and Belle gained as much as 2.9 percent, the most in three weeks for both stocks. SM Prime rose 1.7 percent, and SM Investments fell 0.5 percent to 1,112 pesos at 2:48 p.m. in Manila today.

Officials at SM Investments, JPMorgan, Macquarie Group, and BDO Capital, the investment banking unit of BDO Unibank, declined to comment. SM Investments controls BDO Unibank, the Philippines largest bank.

The companies generate annual sales of about 53 billion pesos, compared with Ayala Land’s 49.9 billion pesos in annual revenue, data compiled by Bloomberg show. Ayala has a market value of about 436 billion pesos.

Sy, who migrated from China in 1936, is the Philippines’ richest man with an estimated net worth of $15 billion, according to Bloomberg Billionaires Index. SM Investments reported last month that its 2012 profit rose to a record 24.7 billion pesos.

To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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