Biz Buzz: Power grid to information grid

Don’t look now, but there seems to be a growing alliance between National Grid Corporation of the Philippines (NGCP) and the Department of Information and Communications Technology (DICT) to push the proposed National Broadband Network.

Biz Buzz sources say officials of the DICT are keenly interested in exploring a possible tie-up with the grid operator to use part of the latter’s network-wide fiber optics cable system for the government’s broadband project. The ambitious undertaking reportedly aims to connect various government agencies nationwide not only for data sharing and transmission but also for disaster response and coordination.

DICT’s top brass recently visited NGCP’s national control center and telecoms facilities in Quezon City as well as a substation in Dasmariñas, Cavite, as part of ongoing coordination meetings. NGCP, for its part, is open to the idea of a public-private partnership (PPP) for the broadband project largely seen as a positive step to improve internet connection reliability and speed.

If this prospers, NGCP could become the operator of not only the country’s power grid, but also the backbone of the national information grid.

One critical issue, however, is the size and available capacity of NGCP’s fiber optic cables that the grid operator can share with the government. Industry insiders claim the older fiber optic cables are smaller with only 8 cores, while the newer ones installed by NGCP since assuming control of the grid in 2009 are much bigger at 36 cores.

Hence, there are cables that are being used “at full capacity” for critical NGCP transmission and communication requirements while others have enough capacity for sharing.

Nevertheless, these are among the many issues being threshed out in ongoing studies and consultations between the two parties. At the end of the day, the DICT and NGCP may come to a mutually beneficial agreement to hasten implementation of the proposed National Broadband Network. At least that’s the plan, in theory. Is this a powerful partnership in the offing? Watch this space, people. —DAXIM L. LUCAS

Hot investors

Never underestimate investors from Visayas and Mindanao, apparently a loyal bunch especially once they decide to back a brand they trust.

This appears to be the case with property developer Cebu Landmasters Inc. (CLI), which had a fairly decent listing at the Philippine Stock Exchange last June 2 despite the tragic events at the Resorts World Manila earlier that day.

The company has gained almost 9 percent since listing, giving it a market value of about P9.3 billion, placing CLI founder and CEO Jose R. Soberano III comfortably into peso-billionaire status.

Many were not surprised at this performance, including BDO Capital and Investment Corp. president Eduardo Francisco, who arranged the IPO.

A few interesting things happened with CLI’s IPO, starting with geography. The company built its reputation in the Visayas and is expanding in Mindanao (no Luzon plans, for those asking). So while investor interest was present around Metro Manila, it paled in comparison from those investors further south.

By Francisco’s recollection, they were entertaining investor crowds in Visayas and Mindanao double the size of those in Manila for CLI—basically the opposite of what usually occurs during these roadshows. The schedule was also slightly different. While roadshows in Manila start around mid-afternoon and mainly lure analysts, similar events in the province start much later.

“The ones who attend are the business owners, they close their businesses first and then attend the roadshow,” Francisco said.

The dress code is decidedly less formal: Jeans and T-shirts are plentiful versus the crisp suits in Manila’s investor meetings.

In the end, these guys mean business. In CLI’s Cebu-Davao roadshows, investors were coming in “basically with blank checks.” Quite an allocation feat for bankers, given the IPO was valued around P2.9 billion.

It seems a lot of trust was placed on CLI and the Soberano family to deliver. No pressure there. —MIGUEL R. CAMUS

Insular’s Ayala icon

A newly renovated Insular Life building at the corner of Ayala Avenue and Paseo de Roxas in Makati will reopen to the public this June. This is the same prime property that the likes of Rockwell Land and other big groups had wanted to acquire in previous years but because it had become a national heritage building, Insular Life is constrained from altering its structure.

Insular Life will keep some executive offices on the building but lease out the rest. The building is estimated to have around 13,000 square meters of gross leasable area in the 10 floors that Insular Life plans to lease out. At an estimated monthly rental rate of P1,200 to P1,300 per square meter in Makati, this is expected to bring in significant recurring earnings for the largest Philippine-owned insurer.

Apart from the office space, the former auditorium in the building has been converted into a hotel-like ballroom that’s suitable for large functions. Union Bank, Insular Life’s bancassurance partner and investee company, will have a “model” branch at the ground floor.

Ahead of completion of the renovation, there has been a long queue of potential tenants seeking office space in this building, Insular Life officials said.

But while the main building itself can no longer be offered to potential investors, Insular Life chief executive officer Nina Aguas says that there’s still space to build on at the back of the building. That’s about a hectare of land, which the insurer can unlock values from in the future.

Meanwhile, Insular Life also owns another low-rise building, Insular Healthcare (I-Care) behind Makati Medical Center, which the insurer can choose to redevelop in the future. The company’s main offices will also be kept in its two-tower office complex in Alabang.

Any consideration for redevelopment or joint venture deals for any of Insular’s assets in the future will be considered “depending on whether it makes a lot of sense,” according to Aguas.

With lots of liquidity and limited investment options, Aguas said Insular Life was constantly looking for investment opportunities that could boost yields while observing utmost prudence. Under Aguas’ leadership, Insular Life is also increasingly interested to invest in infrastructure projects. “We have so much liquidity we’d like to deploy,” she said, adding that the things she was particular about were yield, duration and (brand/proponent) names. —DORIS DUMLAO-ABADILLA