Peso slide may raise value of Maharlika investments
A weak peso may raise the value of some investments of Maharlika Investment Corp, although the impact on its net income is likely to be immaterial, the fund manager’s top official said.
Manila, Philippines — The weakening Philippine peso may increase the value of some investments held by Maharlika Investment Corp. (MIC), according to the company's chief executive officer. MIC President and CEO Rafael Consing Jr. explained that the fund manager's portfolio includes both peso- and dollar-denominated holdings. With the balance sheet reported in pesos, a weaker peso would enhance the peso value of the dollar investments, making the depreciation accretive rather than dilutive.
The Philippine local currency hit a historic low of P62.86 per dollar yesterday, as reported by the Bankers Association of the Philippines data. Nonetheless, Consing emphasized that MIC's foreign currency holdings remain minimal, so the net income accretion will be negligible. The impact of a weaker peso might also extend to MIC's existing and target investee companies that generate revenues in US dollars.
"A number of our current and target investee companies also earn revenues in US dollars," Consing stated. "Translated to peso, this lifts their reported top line – and flows through to MIC directly, via higher dividends and higher equitized earnings." Additionally, Consing noted that the "value accretion" from MIC's acquisition of shares in Asian Terminals Inc. (ATI) differs, as part of the investee's revenues is earned in foreign currency.
In March, MIC finalized the acquisition of ATI through a tender offer, increasing its stake in the port operator to P4.79 billion.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
