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Business deals

Yoma shares surge on $238m capital tie-up with Ayala

Philippine conglomerate emerges as major shareholder of Myanmar group

The tie-up will boost Southeast Asian expansion plans for both groups.

SINGAPORE -- Shares of Myanmar conglomerate Yoma Strategic Holdings surged 14% on Thursday morning after announcing a capital tie-up with Philippine conglomerate Ayala Corp.

The move is designed to strengthen Yoma's core businesses in Myanmar's rapidly growing economy.

According to a statement released on Thursday morning, Ayala will invest up to $237.5 million in Singapore-listed Yoma as well as Yangon-listed First Myanmar Investment, taking a 20% stake in each company, both of which are controlled by Myanmar tycoon Serge Pun.

Shares in FMI gained 500 kyat to hit 11,500 kyat on the Yangon Stock Exchange as of noon on Thursday. Over the past few weeks the stock has traded in the 11,000-12,000 kyat range.

Ayala will use $155 million to buy Yoma's new shares at 0.45 Singapore dollars per share -- well above Wednesday's closing price of SG$0.32 -- and will become the second-largest shareholder in the company after the Pun family, which will retain a 27% stake.

The remaining $82.5 million will be provided as convertible loan to FMI.

According to the statement, the partnership will create a stable shareholder base and strengthen Yoma's financial capacity to accelerate growth in core businesses.

"Today marks a new milestone for the Yoma Group ... We look forward to leveraging the expertise and experience of Ayala to strengthen our existing businesses as well as to explore potential opportunities in Myanmar," Serge Pun, executive chairman of Yoma Strategic and FMI, said in the statement.

Yoma's shares at one point on Thursday morning hit SG$0.40 -- 25% higher than the previous day's close.

As is common among Southeast Asia's family-controlled businesses, Philippine and Myanmar conglomerates engage in a wide range of activities. Ayala's businesses include real estate, finance, energy, telecommunications, automobiles and health care, while Yoma has interests in real estate, automobiles and finance.

Yoma said Ayala's businesses overlap in "many relevant sectors of [Yoma group]," creating synergies for future growth in Myanmar. 

The companies noted that both the Philippines and Myanmar share similar economic conditions -- such as young populations and levels of urbanization -- that favor growth in the long term, hence providing new opportunities.

The investment allows Ayala to speed up overseas expansion. The conglomerate is one of the oldest and most respected in the Philippines, and is increasing investment in Southeast Asia to take advantage of regional economic integration and compensate for its maturing businesses at home.

"Our partnership with the Yoma Group gives Ayala a unique opportunity to participate in Myanmar's growth story," said Chairman and CEO Jaime Augusto Zobel de Ayala. "We have always believed that ASEAN has massive potential to reap the benefits of Asia's rise in the global economy."

Ayala is well positioned in real estate, banking, water distribution and telecommunications, and has diversified into electronics manufacturing, infrastructure, education and health care.

The group aims to double its net income to 50 billion pesos ($984 million) by 2020 from 2015, and similarly lift the share of equity earnings from foreign business -- mainly in Southeast Asia -- to 10% during that time.

Ayala previously attempted to make inroads into Myanmar. In 2014, Ayala unit Manila Water secured a contract with Yangon's local government to help reduce water loss. It also held talks with local companies for a real estate venture in the country.

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