Biz buzz: AG&P changes tack
Remember former AG&P chair Joseph Sigelman? After successfully defending himself against bribery charges brought by US federal prosecutors against him a few years ago, the American businessman is back in the Philippines to rebuild his interrupted business in the country.
But the business landscape has apparently changed while he was in the US for an extended period to fight his legal battles. (He was arrested by US officials upon his return to Manila from a holiday in January 2014 on the charge of violating the Foreign Corrupt Practices Act, and had to relinquish control of AG&P to focus on his legal defense.)
But all that is now behind him, and AG&P — the firm he helped bring back from the brink — is taking a different tack in its recovery bid.
For one, it has a new chair in the person of Jose Leviste Jr. Of course, “Joey” as he is called by friends, is better known for his business interests in the power and mining sectors, and it is in that direction that he is taking the firm.
Specifically, Biz Buzz learned that AG&P will now shift its focus on the liquefied natural gas (LNG) sector. How? By building LNG facilities at its existing Batangas yard, which used to be where the firm built its monstrous modular units for oil and gas industry players around the world. (We say “modular” because large chunks of the oil rigs, for example, are built in Batangas, then shipped to their operating site, where they are assembled, Lego-style.)
In any case, AG&P will now concentrate on building LNG facilities for itself (as it envisions LNG to be a big source of power for the local electricity industry going forward) and for foreign clients. At the same time, the company will also try to get a piece of the action in the Duterte administration’s proposed P8-trillion infrastructure buildup, specifically in the area of metal works, where it has an expertise.
This begs the question: Does the company have the money for all this? After all, it was scrounging around for new equity partners not too long ago. Apparently, it does have some breathing room, as it was able to collect on some long-delayed receivables from old clients. But bigger ventures down the road might require more financial muscle.
For now, AG&P will have to make do with its three main shareholders, namely its Kuwaiti equity investors, A. Soriano Corp. or Anscor, and the ICCP group which is basically involved as a financial investor.
And what of Sigelman himself? The businessman still has an 11-percent stake in the firm, we were told, but—perhaps due to his recent adverse experience— he no longer sits on the board. Instead, he serves as a senior adviser and, as part of a four-man management committee, helps run the firm.
Will the new scheme work? It looks good for now, but ultimately time will tell. —DAXIM L. LUCAS
Unification in 2017
In the next few weeks, expect a major announcement from the Philippine Stock Exchange (PSE) in relation to its renewed bid to take over the Philippine Dealing System (PDS)—a long-running quest to unify capital market infrastructure in this country.
“Just be a little bit more patient,” PSE president Hans Sicat said, adding that the local bourse was now working with the Bankers Association of the Philippines to resolve the remaining issues.
Given this timeframe, Sicat agrees that the long-delayed merger could finally take off in 2017.
We earlier pointed out in this space that the Finance Secretary Carlos “Sonny” Dominguez III was supportive of the the PSE’s merger with PDS (Philippine Dealing System, the holding firm for fixed-income trading platform Philippine Dealing and Exchange Corp. (PDEx), Philippine Depositary and Trust Corp. and Philippine Securities Settlement Corp.) for as long as stockbrokers would commit to comply with the 20-percent single industry ownership limit.
Sicat didn’t want to discuss the matter further for fear it would jinx the progress. But industry sources said that under the proposed scheme to address the industry limit, stockbrokers can only buy shares of the unified exchange when the industry is below the cap.
Another source also said that after resolving the structural technicalities, the remaining hurdle now is the valuation. To recall, the PSE earlier agreed to buy out other shareholders based on an enterprise value of P2.25 billion for PDS. That was way back in 2015 so the valuation may change a bit, our sources said. Whether the sellers will agree to the new pricing, that is the next hurdle.
PSE’s financial adviser JP Morgan has been tasked to review the valuation for this deal. —DORIS DUMLAO-ABADILLA
Almendras’ unfinished business
They say the six years allotted for each Presidential administration isn’t enough time to solve big, structural problems, including Metro Manila’s traffic woes.
This is a good thing for former Aquino administration cabinet secretary Jose Rene Almendras, who has rejoined the private sector heading Ayala Corp.’s AC Infrastructure Holdings.
In a recent chat, Almendras said he wanted to continue solving the traffic problem, using private-sector solutions, and it appears that mission has become quite personal.
Ayala would be revealing in 2017 a number of “big-ticket” unsolicited projects, none of which can be disclosed yet, in hopes to cutting traffic in the capital district—an issue that seemingly has no end.
Of course, working for the private sector means he would have to deal with a different set of realities this time around, including earning an acceptable return for Ayala’s stakeholders.
That may not be so difficult in the case of Metro Manila, which includes so-called hotspots like Edsa.
Almendras said that was because there was an existing market in which there was excess demand, there was almost “zero” market risk. All that was left is for the private sector to introduce technology and “process solutions” to increase capacity.
Almendras believes he also has an advantage in terms of perspective, having served in the public sector.
Bridging the sometimes wide gap between public service thinking, which typically involves prioritizing services to the maximum number of people, and the private sector, which is about maximizing profit, could prove an interesting edge for Ayala. —MIGUEL R. CAMUS
Best stock exchange
Despite a volatile global market environment this 2016, the Philippine Stock Exchange once again earned the bragging right as the “Best Stock Exchange in Southeast Asia”—a title bestowed upon the local bourse by institutional investment magazine Alpha Southeast Asia.
This is the third time in the last four years that PSE earned this distinction. Aside from winning this year, the PSE was also the recipient of the “Best Stock Exchange in Southeast Asia” award in 2013 and 2015.
“We are pleased that Alpha Southeast Asia and the issuers and investors they surveyed for this award value the efforts of the PSE. We were cited for introducing more products and services for the issuers and the investing public and highlighting corporate governance in our role as regulator,” PSE president Hans Sicat said.
The award will be presented to the PSE at the Marquee Awards of the 10th Alpha Southeast Asia Best Deal and Solution Awards to be held on Jan. 25, 2017, in Malaysia. —DORIS DUMLAO-ABADILLA