January 06, 2014

AC unit sells stake in BPO arm

In a disclosure to the Exchange yesterday, Ayala Corp said its wholly-owned BPO investment arm LiveIt has sold its entire stake equivalent to 29% of Stream Global Services to Convergys Corp. LiveIt will realize about US$145m in total net equity proceeds while AC will realize a net gain of about US$46m or around P2b from the asset sale. The transaction is expected to be completed within 1Q14 assuming all regulatory approvals are secured.

Our Take: This asset sale is a welcome development in light of concerns on AC’s growing debt exposure to support rising investments in its operating units and new businesses. Any further sale of less strategic assets should also ease the need for any more dilutive equity issuances.

We also view this positively given the relatively low returns that AC is realizing from some of its investments, thus reinvesting the proceeds into existing and new businesses (primarily power and infrastructure) should generate better returns and enhance AC’s investment portfolio given better synergies among its assets.– WealthSec