Skip to main content

AREIT holders haunted by the ghost of CHP's past

AREIT was down 11% as of end of trading day on Friday August 14, 2020 to closed at 24.10 Pesos from its debut price of 27.00 Pesos.

The event refreshes the memories of the Cemex Holdings Philippines, Inc. (CHP) public offering in 2016. From 10.75 Pesos IPO price, over the years CHP gradually declined and even reached a low of 0.86 Pesos.

We tried to review the two (AREIT and CHP) public offerings and see where they are alike and where they differ.

In the AREIT offering 90.5% of the shares offered to the public were secondary shares owned by the Ayala Land, Inc. (ALI) and only 9.5% were primary shares of AREIT. The AREIT offers shares constituted 49% of the total outstanding and issued shares of AREIT. This structure is different from that of CHP.

In CHP the offer shares were all primary shares constituting 45% of the total outstanding and issued shares of CHP.

Despite the difference in the public offering structure, it seems that their share price are trending the same.

How are they (AREIT and CHP) same? Well, both (AREIT and CHP) offerings were oversubscribed.

In a July 4, 2016 Inquirer.net report titled “Cemex P25-B IPO starts” it was reported that CHP IPO was oversubscribed and a portion of the report is quoted as follow:

“The deal was oversubscribed even without orders from trading participants and local investors,” said Eduardo Francisco, president of BDO Capital & Investment Corp., the offering’s lead underwriter. As such, Francisco said the oversubscription option would be exercised.”

Same with CHP, it was also reported that AREIT IPO was oversubscribed. It was reported by Inquirer.net on August 6, 2020 in a report titled “AREIT completes landmark IPO, 2x oversubscribed“. A portion of the report is quoted below:

“The IPO was oversubscribed by twice the base offer, with “high-quality” domestic and international institutional investors participating in the book-building notwithstanding the continuing coronavirus (COVID19) pandemic, Ayala Land disclosed to the Philippine Stock Exchange on Thursday.”

But the most striking similarity is in the use of the proceeds.

In AREIT since most of the shares offered were secondary shares owned by ALI, the proceeds went to ALI. The net proceeds from the primary shares offered were used to pay ALI for an acquisition of a property owned by ALI. In sum, the proceeds of the public offering accrued to the benefit of the parent company, ALI. 13. Billion Pesos went to the coffers of ALI.

In CHP’s case, the shares offered were primary shares raising a staggering total of 25.1 Billion Pesos. Briefly, the proceeds went to the coffers of CHP but then it was immediately used to pay ultimate parent company CEMEX of Mexico. For a detailed discussion on this please click here.

As observe on those two public offerings, the market typically punishes the shares when most of the proceeds of the IPO accrues to the benefit of the parent company or to the controlling stockholder. And the market typically rewards when proceeds of the IPO are used to expand and create more value.

Disclaimer: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent perspective.  Accuretti Systems Inc. does not hold any shares of Cemex Holdings Philippines, AREIT and Ayala Land, Inc..

Labels:

Comments

Post a Comment

Popular posts from this blog

From Meralco to Rockwell: How the Lopezes Restructured to Put Rockwell Land Under FPH’s Control

  The Big Picture In the span of just a few years, the Lopez family executed a complex corporate restructuring that shifted Rockwell Land Corporation firmly under First Philippine Holdings Corporation (FPH) —even as they parted with “precious” equity in Manila Electric Company (Meralco) to make it happen. The strategy wove together property dividends, special block sales, and the monetization of legacy assets, ultimately consolidating one of the Philippines’ most admired property brands inside the Lopezes’ flagship holding company.  Laying the Groundwork (1996–2009) Rockwell began as First Philippine Realty and Development Corporation and was rebranded Rockwell Land in 1995. A pivotal capital infusion in September 1996 brought in three major shareholders— Meralco , FPH , and Benpres (now Lopez Holdings) —setting up a tripartite structure that would endure for more than a decade.  By August 2009 , the Lopezes made a decisive move: Benpres sold its 24.5% Rockwell stake...
Post a Comment
Read more

ABS-CBN Faces Financial Crisis as TV5 Exits Over ₱1B Dispute: Why Lopez Group Must Use Its ₱50B Windfall to Rescue Its Media Flagship

TV5’s termination of its partnership with ABS-CBN over a ₱1 billion payment demand exposes deep financial cracks. With ₱13 billion in payables and cash reserves down to ₱718 million, the Lopez Group must act fast—using its ₱50 billion windfall from First Gen’s sale to Enrique Razon—to prevent a collapse that could damage its entire credit reputation. When TV5 , backed by the Manny Pangilinan group , pulled the plug on its partnership with ABS-CBN and demanded a ₱1 billion payment , it wasn’t just a broken deal—it was a warning shot. A signal that the financial cracks in ABS-CBN are widening, and the tremors could shake the entire Lopez Group . The numbers are stark: ABS-CBN’s SEC filing shows ₱13 billion in trade and other payables , a ₱11 billion working capital deficit , and cash reserves down to ₱718 million . These aren’t minor hiccups—they’re existential threats. When a major partner like TV5 walks away over unpaid obligations, others will take notice. Talent agencies, event venue...
Post a Comment
Read more

BDO’s Premium Under Pressure: Why Investors Should Watch CASA, Margins, and Cyber Risk

BDO Unibank has long been the crown jewel of Philippine banking—commanding scale, profitability, and a valuation premium that peers struggle to match. But its latest quarterly filing and sector trends suggest that the next chapter may be more challenging than the last. The Margin Squeeze Begins The first red flag is in the funding mix. Current and savings accounts (CASA)—the cheapest source of funds—slipped from about 71.5% at end-2024 to 66.6% by September 2025. Time deposits surged by nearly ₱300 billion. This isn’t just a footnote; it’s a structural shift that raises funding costs. Combine that with the Bangko Sentral ng Pilipinas’ rate-cut cycle—policy rate now at 4.75% and likely heading lower—and you have a classic margin squeeze: loan yields fall faster than deposit costs. For a bank with ₱5.27 trillion in assets, even a 10–20 basis point hit to net interest margin (NIM) can shave billions off earnings. Consumer Credit: A Quiet Risk BDO’s consumer book is growing, but so a...
Post a Comment
Read more