MANILA, Philippines – The Government Service Insurance System (GSIS) continues to take an active approach to equity investing by leveraging opportunities in a volatile market, according to its top official.
GSIS president and general manager Robert Vergara said the country’s largest pension fund remains a long-term investor in the stock market and sees market volatility as an opportunity to load up on stocks with strong fundamentals.
“We will increase our exposure whenever there are opportunities to add to our investments at attractive valuation levels as we have done in recent weeks,” Vergara said.
Vergara said the fund also continues to be on the lookout for alternative investments that will boost returns amid a low interest rate environment.
Just recently, GSIS participated in the preferred share offering of listed gaming firm Leisure & Resorts World Corp. (LRWC), taking up P800 million out of the P1.65 billion deal.
The non-voting and non-participating preferred shares have a coupon rate of 8.5 percent per annum and are paid semi-annually. For each 20 preferred shares, the holders are entitled to one warrant convertible to common shares starting on the fifth year.
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Each warrant, if exercised at a price of P15 or the average weighted trading price for the three months prior (whichever is lower) will be converted to one common share.
Vergara said the fund’s investment in LRWC reflects the agency’s confidence in the Philippine gaming industry, which is forecast to generate total revenues of $2.5 billion by yearend.
LRWC is a minority investor in the casino venture between taipan Henry Sy’s Belle Corp. and Macau casino giant Melco Crown Entertainment. It has committed to invest about P4 billion in the $1 billion casino and hotel complex within Manila’s future gaming hub, Entertainment City.
“We believe that the outlook for the gaming sector is attractive in the medium term,” Vergara said.
By 2017, the Philippine Amusement & Gaming Corp. sees annual casino revenue in the Philippines hitting $10 billion with all four casino resorts in Entertainment City up and running, surpassing Singapore and Las Vegas.
Vergara earlier said the state pension fund was looking to increase its equity exposure to 20 percent by the end of the year. This would bring the agency’s equity holdings to the maximum limit it had set.
As of March, GSIS had P123 billion invested in the stock market, spread in about 60 issues, including blue chips.