Myanmar tycoon open to foreign investment in wake of Ayala deal

YANGON (BLOOMBERG) - Myanmar tycoon Win Aung is open to foreign investment in the listed industrial-estate provider he oversees, following Ayala Corp's tie-up with a firm traded on the nation's fledgling stock exchange.

In an interview in Yangon, Win Aung said a stake sale is an option as he plans to expand Myanmar Thilawa SEZ Holdings, which operates a manufacturing zone where 109 firms have opened factories or plan to do so.

"We'll need more capital and technology," Win Aung, the firm's chairman, said on Thursday (Nov 28). "Detailed plans will be revealed later after the authorities officially allow foreigner participation on the Yangon Stock Exchange."

Myanmar is trying to expand a stunted bourse that currently has just five stocks by allowing overseas purchases of domestic equities from 2020. The Philippines' oldest conglomerate Ayala is investing in one of those five - First Myanmar Investment - via an US$82.5 million convertible loan that will become a 20 per cent shareholding when rules permit.

The four-year-old Thilawa special economic zone is viewed by some as the largest in Myanmar. Japanese, Thai and Malaysian firms account for the bulk of the factories located there, according to Win Aung.

Myanmar's business community hopes to benefit from the US-China trade war by luring manufacturers fleeing tariffs. Win Aung said the tension had yet to impact Thilawa significantly.

"But Myanmar is in a good position to benefit from the trade war," he said. "It's really important that the government sets the right policies on how to attract potential investors."

Win Aung is also the founder and chairman of conglomerate Dagon Group. He was on the US government's list of "specially designated nationals" until 2015, under a sanctions program that targeted individuals and entities when the country was run by a military junta.

Net foreign-direct investment into Myanmar collapsed to 1.8 per cent of gross domestic product last year from 6 per cent in 2017, World Bank data shows.

That reflected in part a souring of sentiment after the Rohingya refugee crisis flared up in Rakhine state in the second half of the same year.

At the same time, some firms remain interested in gaining exposure to Myanmar's high levels of economic growth.

Ayala is placing a US$237.5 million bet on the nation by linking up with one of the country's best known tycoons, Serge Pun.

Ayala bought a 20 per cent stake in Singapore-listed Yoma Strategic Holdings, and 20 per cent of Yangon-listed First Myanmar Investment, both led by Pun. The investment makes Ayala the second-largest shareholder in the group, according to Yoma, and is the largest foreign direct investment made by a Philippine company into Myanmar.

Correction note: This article has been amended to reflect the correct size of Ayala's stake in Yoma Strategic Holdings. We are sorry for the error.