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Stock Commentary

Discovery World pushes P11-M into new Davao-based development holdco

Merkado Barkada
Discovery World pushes P11-M into new Davao-based development holdco

Discovery World Corp [DWC 2.60 7.14%] incorporated One Davao Corporation (ODC), with an authorized capital stock of P100 million, and will invest P11 million in ODC shares, making ODC a wholly-owned subsidiary of DWC.

In its disclosure to the PSE, DWC indicated that ODC will act as a holdco for all of DWC’s Davao-based property development projects. DWC paid for its subscription with P10 million in cash, with the remaining P1 million available upon request from ODC’s board.  DWC is owned by the Tiu Family (no relation to Antonio), and is engaged in the development and operation of resorts and other tourism-related destinations in the Philippines.

MB BOTTOM-LINE

I saw some online chatter hyping this up as a big development, but the fact is that nearly nothing of interest has happened here.

Take a look at any corporate org chart and you’ll see that it’s common for large corporations to have dozens (sometimes hundreds) of subsidiary corporations. I’m not even talking about the conglomerate holdcos that are basically just glorified investment portfolios; corporations use subsidiaries for a wide variety of reasons, and considering how painfully easy corporations are to make (not counting the red tape bureaucracy of the process, which takes time), it’s a natural outcome that even corporations with a well-defined business focus might have several subsidiaries like ODC nestled somewhere in the org chart.

The authorized capital amount of P100 million is marginally interesting, but if you remember from our earlier talk on shares, “authorized capital” is just the maximum amount of capital that the ODC board of directors is allowed to raise; in this case, the ODC board sold P11 million of shares to DWC, and that’s it. I think any development company that wants to be relevant in the long term needs to be looking at Davao (and other non-Metro Manila regions), so I’m interested to watch how DWC uses ODC to develop its interests in the area.

For now, though, not much going on here.

 

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DISCOVERY WORLD CORP PHILIPPINE STOCK EXCHANGE
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