Holding and management

The Company

GT Capital Holdings (GTCAP) is the primary vehicle for the holding and management of the diversified business interests of the Ty family, with business interests in banking, auto assembly, power generation, real estate and insurance. GTCAP has banking exposure through its 25.1% stake in Metropolitan Bank and Trust Company (MBT), the largest Philippine bank in terms of capitalisation, with total assets of P1.65trn ($36.6bn). GTCAP also holds a 51% stake in the Toyota Motor Philippines Corporation (TMP), a joint venture with the Toyota Motor Corporation and Mitsui and Company Limited. TMP engages in assembly, import, distribution and after-sales support for Toyota and Lexus vehicles in the Philippines.

Global Business Power (GBP) is the largest independent power producer in the Visayas region and is GTCAP’s power generation arm, in which it holds a 51.3% stake. GBP has nine power generation facilities in Visayas and Mindoro Island with a combined capacity of 704 MW. Federal Land is GTCAP’s real estate firm, which develops residential and commercial projects. In 2014 Federal Land made reservation sales of P13.4bn ($297.5m) and it has a land bank of 104.3 ha. Philippine AXA Life Insurance Corporation is the second-largest life insurance in the country in terms of total premiums earned and is GTCAP’s insurance exposure through its 25.3% stake in the company.

Development Strategy

GTCAP is well positioned in the growing middle-class market of the Philippines. In 2014 the Chamber of Automotive Manufacturers of the Philippines recorded a banner year, with the industry registering sales of 234,747 units, a 30% spike over the previous year. The passenger car segment exhibited the biggest surge, growing by 48% to 90,287 units. Toyota managed to outpace the industry’s growth with 108,658 unit sales during the same period, an increase of 42%. Toyota continued to be the top seller, with a 39% market share. The number of dealerships grew from 32 in 2012 to 50 in 2015 and is set to expand into growing cities outside of Metro Manila. Toyota’s wide dealership network, availability of original parts, quality service and higher resale value are the main reasons behind customers’ brand loyalty. In terms of the real estate business, GTCAP is keen on making a mark in the growing housing sector, particularly the mass market housing segment, through its acquisition of Property Company of Friends (PCFI). GTCAP bought an initial 22.68% stake in PCFI for P7.24bn ($160.7m) plus an option to raise its ownership to 51% within the next three years. PCFI has a total land bank of 1632 ha.

MBT is ahead of many of its competitors. In terms of net interest margin, MBT managed to register 3.6% as of late 2015. MBT also has the highest total equity at P192bn ($4.3bn) and a total capital adequacy ratio of 19.9% as of late 2015.

Looking Ahead

Moving forward, GTCAP’s strategy is to maintain the synergies of its subsidiaries. It has a bancassurance business and cross-sells various products through subsidiaries. In November 2015 AXA purchased GTCAP’s 100% stake in Charter-Ping An, which is the fourth-largest non-life insurance firm into the country in terms of net premiums written and earned, for an amount of P2.3bn ($51.1m).

Entry into the infrastructure sector is something that GTCAP has yet to achieve. In terms of public-private partnerships, GTCAP is eyeing the Muntinlupa-Cavite Expressway, Cavite-Laguna Expressway and South-west Integrated Transport System Project. Property development is also a key area of interest. The acquisition of PCFI allows GTCAP to enter Calabarzon province, where 17.7% of overseas Filipino workers are from, the highest level in the Philippines, which typically help support ongoing housing development. Meanwhile, according to a study by the University of Asia and Pacific, by 2030 there will be a backlog of 6.5m homes. As long as the Philippines maintains its growth, GTCAP will move in unison.

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The Report: The Philippines 2016

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