MIGUEL R. CAMUS
THE group of businessman Manuel V. Pangilinan and conglomerate Ayala Corp. are once again setting aside their rivalry, announcing on Tuesday the formation of an alliance to bid for government railway infrastructure projects.
The agreement between the two players, which are competitors in the telecommunications sector, is their second partnership since a three-way agreement with the Lopez family in 2010 for a failed bid to acquire the Angat hydroelectric plant in Bulacan province.
The alliance is seen to boost their efforts to enter the railways segment while countering aggressive players, including conglomerate San Miguel Corp. (SMC), which is making a strong push into transport infrastructure, snapping up various toll-road assets and, most recently, a minority stake in flag carrier Philippine Airlines Inc.
“It makes strategic sense as it takes out a potential competitor. Ayala also has experience on how to manage this type of asset,” Joseph Roxas, president of Eagle Equities Inc., said in a phone interview on Tuesday.
Ayala Corp. and Pangilinan-led Metro Pacific Investments Corp. (MPIC) on Tuesday signed a memorandum of agreement to jointly pursue and develop light- rail projects in Metro Manila, a Philippine Stock Exchange filing showed.
Under the agreement, each of the parties will own 50-percent interest in the light-rail projects and related real-estate development undertakings.
The partnership is initially eyeing to bid for the light-rail transit projects identified under the government’s Public-Private Partnership (PPP) Program. However, it is also open to work together on other rail-related opportunities, the companies’ joint statement read.
“We each have unique strengths and capabilities that, when combined, create a unique value proposition in rail development. We hope to contribute meaningfully in helping raise the standards of our public utilities,” Ayala Corp. Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala said in the statement.
“This strategic alliance will create integrated solutions that will improve public transportation through our vision to transform the country’s light-rail transit system into a network very much like those in Hong Kong, Singapore, Kuala Lumpur and Osaka,” Pangilinan said in the same statement.
“The existing system is overcapacity and under invested—the need to improve the existing rail systems now cannot be overemphasized,” he added.
Ayala, the country’s oldest conglomerate and the more conservative of the two partners, has been expanding outside its core water utility, telco, real estate and banking businesses into power and transportation.
It recently won the bid for the government’s first and smallest PPP project: the 4-kilometer toll road that will link Daang Hari Road in Cavite to the South Luzon Expressway. It said last week it is looking to bid for the contract to extend and manage the Light Rail Transit Line 1 (LRT 1).
MPIC, which has water utility, power distribution, toll road and hospitals assets, is keen on the operation and expansion of Metro Rail Transit 3 (MRT 3).
This, after losing several bids to SMC to acquire toll roads in southern Metro Manila, including South Luzon Expressway, which would have complemented MPIC’s North Luzon Expressway.
MPIC is a unit of Hong Kong-based First Pacific Co. Ltd., which is part owner of Philippine Long Distance Telephone Co., the country’s largest telecommunications company followed by the Ayala Group’s Globe Telecom Inc.
The announcement came after the Philippine stock market closed. MPIC shares declined 0.94 percent to P4.23 each, giving it a market value of P104 billion.
Ayala Corp. added half a percent to P419 per share, giving it a market value of P241.9 billion.