JG Summit eyes more overseas acquisitions

Posted at 10/29/12 9:25 AM

MANILA, Philippines - Taipan John Gokongwei’s investment vehicle JG Summit Holdings Inc. is seeking to expand its presence overseas with plans to acquire food and beverage firms within ASEAN as well as real estate properties across the globe.

BJ Sebastian, senior vice-president at JG Summit, said the conglomerate is on the lookout for real estate assets elsewhere in the world which it can develop as part of efforts to shore up its land bank to ensure a steady stream of projects.

The Gokongwei Group, through its 36.1 percent controlling interest in United Industrial Corp. Ltd., has a presence in the improving real estate sector in Singapore and China, particularly in Chengdu, Tianjin, Shanghai and Beijing.

UIC has a portfolio of 2.2 million square feet of office space and one million square feet of retail space in Singapore.

Among UIC’s best known commercial landmarks include the UIC Building, Singapore Land Tower, SGX Centre, The Gateway, Stamford Court, Marina Square (a massive shopping and hotel complex in the Marina Bay) and West Mall (a suburban shopping complex).

UIC also has major residential projects such as The Belleforte, The Paterson, and Stevens Loft in Orchard Road, as well as One Amber and Grand Duchess at St. Patrick’s in the popular East Coast area.

Sebastian said demand in the Singapore retail and hospitality sectors is seen to be resilient due to the influx of international retailers and buoyant visitor arrivals. He also sees the office rental market to continue to be competitive amid a tough global business environment.

On the homefront, the group’s property arm Robinsons Land Corp. will continue its expansion program, targeting to open four new malls, two office buildings and at least three new Gohotels for its fiscal year ending September 2013.

Sebastian said RLC has increased its landbank by 111 hectares year-on-year to 534 hectares as of end-June this year, good for four to five years of development. “The higher landbank will give each business unit a medium-term project pipeline visibility,” he said.

The group’s food and beverage unit Univesal Robina Corp. is scouring Asia for possible acquisition targets. “We’re looking at firms with strong brands and a wide distribution network, Sebastian said.

He noted that URC’s international revenues increased five-fold in nine years from $84 million in 2003 to $443 million in 2011. In the nine months of its fiscal year ending September this year, revenues rose six percent as most countries posted growth except for Thailand.

From 29 percent contribution to total branded consumer foods group sales in 2003, URC overseas operations’ share increased to 39 percent last year.

URC’s products are available in China, Vietnam, Indonesia, Malaysia and Thailand. Plans are now underway to set up shop in Burma as it expects international operations to grow as big as its domestic business in five years.

URC is also the dominant market leader in candies, chocolates, biscuits, cup noodles and tea beverage. It grew the local non-carbonated beverage market with the successful launch of C2 Cool & Clean Green Tea, building on the global trend towards health and wellness.

URC later forayed into other areas of the non-carbonated beverage market, such as juices, energy drinks and ready-to-drink coffee, among others.

Meanwhile, the group is on track to complete the construction of its $800 million naptha cracker plant - the first in the country – by late 2013. Located in Batangas, the plant will produce 320,000 metric tons of ethylene annually when it starts commercial operations by early 2014.

The naptha facility is estimated to generate annual sales of around $1 billion on full production and at current prices.

While it is targeting to export 25 percent of its polymer output to neighboring countries on its first full year of operations, the group’s primary market would be the Philippines, which consumes 350,000 to 400,000 tons.