TPG, Khazanah invest $132m in Philippines housing developer

AVCJ Research's records indicate that it is one of the largest-ever private equity deals in the Philippines. Last year, CVC Capital Partners completed the country's largest-ever buyout, acquiring a majority stake in SPi Global that valued the business process outsourcing company at $300 million.

The two investors committed to subscribe to 892 million shares - or about two thirds - of a follow-on offering that raised PHP9 billion. They paid PHP6.50 per share, the top end of the indicative range for the offering, and own approximately 16% of the company's total issued shares.

According to a regulatory filing, it is only the second time that global institutional investors have participated in a formal cornerstone tranche in the Philippines. 

"We are thrilled to participate with 8990, the largest affordable home builder in the Philippines, as they address an important need in the country with very attractive and affordable housing," said Tim Dattels, managing partner of TPG Asia, in a statement.

The Philippines' Housing and Land Use Regulatory Board estimates that 1.26 million mass housing units were built between 2001 and 2011, but the backlog during this period was 3.1 million units. The country's total housing backlog is expected to reach 6.3 million units by 2030, largely driven by demand for mass housing equating to approximately 4.8 million units.

Established in 1995, 8990 has four main business areas: low-cost mass housing, medium-rise condominium units, time shares and hotel operations. The company went public in 2012 through a reverse merger, acquiring IP Converge Data Center as a listed shell for PHP167.6 million.

8990, which operates under the Deca Homes and Urban Deca Homes brands, uses a pre-cast construction process that enables it to complete townhouses and single-floor attached units in just 8-10 days. It also offers home financing packages that require an upfront payment of 2%, compared to the 10-20% payment usually required by other developers.

The company said in its 2013 annual report that it had completed 16 mass housing projects comprising around 14,000 units. It had eight more projects under development across five cities in the Philippines, accounting for approximately 24,000 units, of which 11,000 were already sold. Based on the existing and available land bank of 250 hectares, it has an identifiable pipeline of 64,405 units across 18 projects.

Proceeds from the offering will be used to pay down long-term debt and for land acquisitions.

8990 reported a net income of PHP2.18 billion in 2013, up from PHP1.7 billion the previous year. Revenue came to PHP5.35 billion compared to PHP3.83 billion in 2012. Low-cost mass housing accounted for 87% of revenues in 2013.

UBS acted as sole global coordinator and international bookrunner for the offering, as well as sharing the domestic lead underwriting duties with SB Capital Investments Corporation.

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• Topics
• Real estate
• Real estate
• PIPEs
• Southeast Asia
• TPG Capital
• Khazanah Nasional
• Philippines
• Southeast Asia
• PIPE
• Real estate