Ongpin, Ashmore group part ways
Partnership winds down; new investor eyedBy Daxim L. Lucas
Philippine Daily Inquirer
The multibillion-peso partnership between businessman Roberto Ongpin and the Ashmore Group is set to end “very soon,” with the former Marcos trade minister ready to bring in a new investor who will buy out the UK-based fund from his flagship property firm.
Ongpin made the disclosure in a letter to the Inquirer, reacting to Monday’s Biz Buzz column that detailed a disagreement between both parties in the running of publicly listed Alpahaland Corp.
“I do not deny that there were issues and disagreements between Ashmore and myself,” said Ongpin, who helped spearhead the fund’s $2-billion investment binge in the country since 2006. “Ashmore made it clear to me that no more funds would be available from Ashmore for Alphaland. Thus, we went on to explore several possibilities whereby a third party or even myself would acquire the Ashmore investment in Alphaland. Thus, it is a fact that the ‘battle royale’ (referring to the Biz Buzz item’s title) was never fought and never happened.”
In an April 2013 e-mail exchange, Ashmore attempted to ease Ongpin out of Alphaland, citing actions of the company’s board of directors which it objected to. The investment fund attempted to convince Ongpin to leave by offering the company a $50-million loan—to which the businessman replied that not even a $50-billion loan could make him leave.
Since then, negotiations on Ashmore’s exit from Alphaland have been “peacefully and amicably resolved,” Ongpin said.
He explained that private equity funds, in general, have a seven-year life span, after which its investments must be wound down.
“The relationship between myself and Ashmore started in 2006 and is now nearing its seven-year life, which means that the invested funds need to be liquidated and returned to the investors in the fund,” he said.
Ongpin said that he had come to an agreement with another investment group, which he declined to identify for now, for it to buy out Ashmore from Alphaland.
“The price has been agreed and they are now going through the final drafting of the various agreements that are required,” he said, adding that the real estate firm was not losing its funding source, but was instead gaining a new investor who would continue to support its projects.
The company’s big-ticket projects include Balesin Island Club resort off the coast of Quezon province, the Makati Place mixed-use complex, the Alphaland Tower along Ayala Avenue and the Alphaland Marina Club along Manila Bay.
“My own belief is that in fact, the new investor will be more aggressive in backing Alphaland projects because it will not be operating under any seven-year funding constraint,” he said.
Ongpin ended on a conciliatory note saying he would “always be grateful to Ashmore” for having backed him during the last seven years. “Without their financial backing and support, the projects of Alphaland … would never have come into existence,” he said.
Ashmore’s biggest investment coup in the Philippines was its buyout of Saudi Aramco’s 40-percent stake in Petron Corp.—the country’s biggest petroleum refiner and distributor—in 2008 for $550 million. It eventually raised its stake to $800 million before selling out completely to San Miguel Corp. at a profit.
At its peak, the fund had some $2 billion invested in the country, although questions were raised earlier about its aggressive stance, prompting speculation that it was fronting for First Gentleman Jose Miguel Arroyo—an allegation that was not proven.