TPG, Khazanah in $132m Philippine foray

The private equity giant and Malaysian sovereign wealth fund have each bought a 10 percent stake in a Philippine housing developer and manager.

Fort Worth-based private equity firm TPG Capital and Malaysian sovereign wealth fund Khazanah Nasional Berhad have made their first forays into the Philippine property market with a combined PHP5.8 billion (€97 million; $132 million) investment in listed housing developer 8990 Holdings.

TPG and Khazanah, independently from one another, bought just under a 10 percent stake in 8990 Holdings for approximately $66 million, though the deals happened to close on the same day.

Each investor has been granted a seat on the company’s board, and it is understood they intend to stay in the company for the longer term.

TPG’s share of the capital is understood to have come from its $3.3 billion TPG Asia Partners VI, a private equity fund. After two years on the market, the private equity fund closed just this month slightly under its $3.5 billion target. This will be the fund’s seventh deal, bringing its capital to 20 percent invested, PERE understands.

Although TPG has been setting up a separate real estate investment business, it is understood to be limited to North America and Europe at this point. As 8990 Holdings is simultaneously a housing developer and financier, TPG considers it more of a private equity investment.

TPG is understood to have been looking at the Philippine property market for several years. Although the country has a young population and increasing consumption power, there is a shortage in the housing market. Indeed, the country’s Subdivision and Housing Developers Association, a non-profit property industry organization, has estimated that the Philippines’ housing backlog could hit 6.5 million by 2030.

8990 Holdings deals exclusively in affordable housing, although the company has also been contemplating a move into shopping malls recently. Under the brand of DECA homes, 8990 builds houses in as little time as eight days. It then works alongside the government to sell them, usually at a price of around PHP450,000 per house.

In the Philippine stock exchange statement, TPG’s managing partner and new co-head of Asia Tim Dattels said that as “the largest affordable home builder in the Philippines, [8990] addresses an important need in the country with very attractive and affordable housing.” Although TPG declined to comment beyond the release, it is understood the firm is planning to make further investments in the Philippines over the next few years.

Most recently, TPG has undergone a restructuring in Asia. In February, the firm relocated senior partner Tim Dattels from San Francisco to Hong Kong to become co-head of Asia in February alongside Singapore-based co-head Ben Gray. Coincidently, TPG further added to its Southeast Asia team with the hire of Datuk Ganen Sarvananthan from Khazanah, the other investor in 8990, where he was head of investments and executive director.