GT Capital (GTCAP) will venture further into financial services and infrastructure by using the PHP12 bn proceeds of its 12 mn perpetual preferred shares offering. A primary offering of 8 mn shares at PHP1,000 per share is set followed by a 4mn shares offering in case of oversubscription. GTCAP, this year, acquired 15.6% of infrastructure development conglomerate Metro Pacific (MPI) and increased its stake in affordable housing developer Pro-Friends to 51%. Pro-Friends’ main development is the 1,400-hectare Lancaster City covering Imus, Kawit and General Trias in Cavite. Financial services comprise 31% and infrastructure take up 3% of GTCAP’s net income as of June 2016. Toyota still dominates the holding company’s net income with a 50% contribution. GTCAP’s roster of businesses of auto, infra, property and financial services seems like a good mix and already shapes up the company’s identity. Of the 12 conglomerates in the coverage, GTCAP is most prone to an interest rate hike since property and auto, its main contributor, is negatively correlated with interest rates. This may be the reason why GTCAP is going further into infra and financial services. Metrobank (MBT) will benefit from higher interest rates, while there is a huge demand for infra projects through tollways and even domestic airports. Auto still dominates GTCAP’s earnings, and it will still take a hit in an interest rate hike.
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