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Henry Sy-led SMIC looking to shift investment strategy

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THE holding firm of country’s richest man Henry Sy, Sr. is shifting its investment strategy, favoring businesses where they can secure a minority position instead of taking full control of the company.

“What we will be doing this time is looking at investments differently, maybe looking into those that can perhaps grow with a little push, then maybe we will get just a minority position,” SM Investments Corp. (SMIC) Vice Chairperson Teresita Sy-Coson told reporters on the sidelines of the GRI Sustainability Summit at Conrad Manila on Monday.

“Instead of a majority where we will run, most of the companies will be run by the main proponents,” Ms. Sy-Coson explained.

SMIC has been positioning itself in a number of firms in the previous years. In 2017, it acquired a 34.5% stake in Negros Navigation Company, Inc., the parent of integrated transport solutions provider 2GO Group, Inc.

The listed conglomerate also acquired earlier this year a 34% interest in Goldilocks, Inc., after the deal to buy the entire shareholdings of the bakeshop chain fell through. Goldilocks’ current owners will continue to run the company with SMIC as a minority investor.

A 34% interest should be enough to influence decisions that need approval by at least two-thirds of a company’s shareholders.

Meanwhile, Ms. Sy-Coson said SMIC remains unaffected by the higher inflation and rising interest rates.

“The customers are still buying, it has not been affected by inflation. Maybe there will be (impacts), but not now,” Ms. Sy-Coson said.

The president of SMIC’s property arm, SM Prime Holdings, Inc., echoed this view, saying that consumption has not slowed down amid the negative economic figures.

“I think consumption will continue given that we’re going into the holiday. The full effect of the inflation numbers will probably be after that,” SM Prime President Jeffrey C. Lim told reporters in a separate interview.

Mr. Lim also noted rising interest rates have yet to affect its residential business, saying the company is moving ahead with expansion plans.

“So far, we have not seen it and we continue to do the developments. I guess it’s still too early. The Chinese market is also increasing the demand for residential (projects),” Mr. Lim said.

Asked how SM Prime fared in the third quarter of the year, Mr. Lim said it performed “within target.”

SMIC grew its net income by nine percent in the first six months of 2018 to P18.1 billion, higher than the P16.6 billion it realized in the same period a year ago. Revenues likewise expanded by 12% to P204.9 billion, thanks to the expansion of its shopping mall and residential developments, and retail businesses, offsetting the minimal decline for its banking unit.

Shares in SMIC shed 0.46% or P4 to close at P866 each at the stock exchange on Monday. — Arra B. Francia