HENRY SY-led SM Investments Corp. is increasing expenditures next year by P5 billion to further expand its businesses. 

Jose T. Sio, executive vice-president and chief finance officer, told reporters 60% of the P25-billion capital expenditure would be sourced from internal funds, while 40% would be borrowed. 

Mr. Sio, however, said there would be no more need to go into debt if SM Investments chooses to divest shareholdings in other companies.  ‘We may opt to liquefy some of our investments so [there’s] no need to borrow,’ he said.

Mr. Sio did not specify which assets would likely be sold.  SM Investments raked in a one-time gain of P27.148 billion from the sale of its 11% stake in San Miguel Corp., Southeast Asia’s largest food and beverage manufacturer, to the San Miguel Retirement Plan. 

Mr. Sio earlier said the Sys would keep their stake in Ayala Corp., the country’s largest and most diversified conglomerate.  Shoemart, Inc., Sysmart Corp. and mall magnate Henry Sy hold 3.497% of the listed firm, equivalent to 15.58 million shares. 

Meanwhile, the Sy mall developer SM Prime Holdings, Inc. will open three malls next year, needing P6 billion to fund the projects’ completion. 

The three new malls will bring SM Prime’s total malls, excluding those in China, to 33 by end-2008. 

SM Prime chief finance officer Jeffrey Lim said the company would like to raise the P4 billion through local debt. The remaining P2 billion, he said, would be sourced internally. 

‘We’ll review the interest rate environment, and we’d probably raise P4 billion for the capital expenditure,’ he said.  Mr. Lim said a new mall in Marikina would be the largest with about 170,000 to 180,000 in square meters (sq. m.) in space.

Meanwhile, two malls in Bulacan and Pangasinan would cover 40,000 sq. m. each.  The company is shelling out another P1.2 billion for the expansion of SM City North Edsa in Quezon City next year.

SM Prime also plans to expand SM Megamall in Ortigas and SM Fairview, also in Quezon City.  Mr. Lim also said the fold-in of the Sy family’s China malls into SM Prime would be finalized by second quarter of 2008. 

SM Prime’s board of directors last month approved the acquisition of the Xiamen, Jin Jiang and Zengdu malls for P10.8 billion through a share swap deal with the Sy family.  A fourth mall in China, Mr. Lim said, is being studied after the Sys bought a seven-hectare property in Chongqing province.  SM Investments’ shares yesterday closed flat at P335, while SM Prime tumbled by 4.76% at P10.