Conglomerate Ayala Corp. has raised its stake in water concessionaire Manila Water Co. (MWC) to 48.8 percent, from 43.1 percent, by buying most of the shares held by strategic partner Mitsubishi Corp.
The 5.7-percent stake sold by Mitsubishi, which will be left with a marginal 1.2 percent interest in MWC, was valued at P2.8 billion and executed via a special block sale through the Philippine Stock Exchange, Ayala said in a statement.
Ayala Corp. said it was pleased to have this opportunity to boost its stake in the water utility.
“Manila Water has consistently shown its ability to deliver world-class water and wastewater services, which brings countless benefits to the local and international communities in which it operates. We believe in the long-term growth potential of Manila Water as it continues to expand outside the East Zone of Metro Manila into other areas here and abroad that are in critical need of reliable water and wastewater services,” Ayala president and chief operating officer Fernando Zobel de Ayala said.
Mitsubishi has been a partner of Ayala since 1974 and a shareholder of MWC since 1997. The reason for selling most of its shares to Ayala was not disclosed.
MWC is in the thick of arbitration proceedings against regulator Metropolitan Waterworks and Sewerage System (MWSS), which rejected the petition by water concessionaires MWC and Maynilad Water Services to raise water tariffs. The regulator instead ordered a rate cut for the next five years.
Since the MWSS issued the order in September, MWC’s share price had dropped by over 30 percent from P31 to around P21.35 a share as of Monday’s close. Ayala’s announcement of its purchase of Mitsubishi’s 140 million shares—which indicated strong shareholder support for MWC despite its current regulatory woes—boosted the water utility’s share price by 3.28 percent to close at P22.05 a share on Tuesday.
The arbitration proceedings may take up to 12 months to resolve. Many investors are hoping that the concessionaires will get favorable results from the proceedings.
Apart from its concession in Metro Manila’s East Zone, MWC’s domestic water businesses include Boracay Water, Laguna Water, Clark Water, and a bulk water supply project in Cebu. Combined, these businesses serve eight million Filipinos.