Corporate News

GT Capital goes into microfinancing

Posted on August 10, 2017

GT CAPITAL Holdings, Inc. is acquiring a 20% stake in a motorcycle financing firm for P379.92 million, in a bid to enter the microfinancing sector to serve the low- to middle-income market.

In a disclosure to the stock exchange on Wednesday, the holding firm of tycoon George S.K. Ty said it gained board approval to acquire four million common shares of Sumisho Motor Finance Corp. (SMFC) at P94.20 apiece.

Half of the shares will be purchased from Philippine Savings Bank (PS Bank), a subsidiary of GT Capital’s banking arm Metropolitan Bank and Trust Company. The other half will be acquired from PS Bank Retirement Fund, the provider of retirement funds to PS Bank employees.

The price of the transaction was based on the book value of the company as of June 30, 2017, alongside a fairness opinion made by an independent professional firm. Payment will be handed on or before August 11.

In a separate disclosure, PSBank said it will still own six million shares in SMFC.

Incorporated in 2009, SMFC was established as a joint venture between PS Bank, PSBank Retirement Fund, Sumitomo Corp., and Sumitomo Corp. of the Philippines. The company’s main line of business is to engage, transact, or deal in the lending or leasing of motorcycle purchases to retail customers.

“The purchase of SMFC shares will allow GT Capital’s entry into microfinancing, specifically motorcycle financing, a high growth sector in the Philippines. In addition, it will give the Group an opportunity to tap the low to middle-income sector of the Philippine market -- the primary clientele of SMFC,” the Ty-led holding company said.

The transaction will further allow GT Capital to establish its market position in automotive assembly, dealership, financing, property development, and banking to develop synergies across its different businesses.

For its part, PSBank said the transaction will improve its Tier 1 capital ratio as well as its capital adequacy ratio that align its capital planning initiatives with reforms under Basel III. Basel III refers to an international regulatory framework for banks that aim to strengthen the regulation, supervision, and risk management of the banking industry.

Incorporated in 2007, GT Capital’s subsidiaries include property firms Federal Land, Inc. and Property Company of Friends; automobile firm Toyota Motor Philippines Corp. and GT Capital Auto Dealership Holdings, Inc. It is also the second largest stakeholder in Metro Pacific Investments Corp. at 15%.

GT Capital booked an attributable net income of P3.1 billion in the first quarter of 2017, a 5.19% increase from the same period a year ago.

PS Bank, meanwhile, posted a 2% increase in earnings for the first half of the year to P1.18 billion, driven by the double-digit growth in core income for the period.

Shares in GT Capital lost P15 or 1.23% to P1,200 each at the stock exchange on Wednesday. -- Arra B. Francia