THE Securities and Exchange Commission has approved SM Prime Holding’s proposed issuance of 912.89 million common shares to the two holding companies owned by the Sy family in exchange for full ownership in the three malls in China.

SMPH is the listed shopping-mall development arm of SM Investments Corp., which is majority-owned by shopping-mall magnate Henry Sy. Jeffrey Lim, executive vice president and chief finance officer of SMPH, said the corporate regulator approved on May 20 the issuance of common shares to Affluent Capital Enterprises and MegaMake Enterprise Ltd. 

The said shares were also exempted from the registration requirements of the Securities Regulation Code. The share swap, which was initiated last November, was valued at P10.8 billion, or about P11.86 per share.

SMPH decided to acquire the China malls, as this would allow them to gain a foothold in the world’s fastest-growing economy and to serve as a platform for its long-term growth outside of the Philippines, where it is already the most dominant player. Earlier, company president Hans Sy said they are spending P1 billion to fund the construction of a fourth mall in China, located in Chongqing, in the third quarter.

“The mall will have a gross floor area of 140,000 square meters and is up for completion by 2010,�? Sy said. The three existing malls are in the southern and western parts of China, namely, Xiamen, Jinjiang and Chengdu. The mall in Xiamen was the first to open in December 2001. 

It has a gross floor area (GFA) of 128,000 sq m, almost similar in size to SM City Santa Mesa and is reportedly 100-percent occupied. SM Jinjiang opened in November 2005 with a GFA of 170,000 sq m and occupancy of 74 percent. Opened last year was SM Chengdu with a GFA of 170,000 sq m and an occupancy rate of 71 percent.

“China is still a relatively new area for us and we will remain conservative in our approach when it comes to investing there,�? Sy said.

In the next five years, SMPH’s plan is to build three to four additional malls in China as part of its long-term growth strategy.

The investment is on top of the P6-billion capital spending SMPH has allotted this year for its Philippine expansion program.