Sumitomo takes 19.2% stake in LRT1

Light Rail Transit (LRT) Line 1. FILE PHOTO

Japanese conglomerate Sumitomo Corp. has acquired a 19.2-percent stake in the company that holds the concession to operate, maintain and extend the 20.7-kilometer Light Railway Transit 1, giving more financial muscle and technical expertise to Metro Manila’s oldest elevated railway system.

Sumitomo bought into the LRT1 concession by acquiring a 34.9-percent stake in a subsidiary of Metro Pacific Investments Corp. (MPIC) that, in turn, holds an effective 55-percent interest in Light Rail Manila Corp. (LRMC).

LRMC’s 32-year concession to operate this vital rail infrastructure that runs from Monumento in Caloocan to Baclaran started in 2015. In the first quarter, LRT1 had a daily ridership of 422,703, down by 9 percent year-on-year.

Currently with 20 stations, LRMC has started work on the extension of the system to Cavite.

The entry of Sumitomo, an experienced global rail investor, would provide further operational efficiencies and future development opportunities for LRMC while reducing risk exposure and funding obligations for the LRT1 extension to Cavite, MPIC president Jose Ma. Lim said during the annual stockholders’ meeting of MPIC on Friday.

The stake, which was sold at a premium to book value, also increased the cash position of MPIC, Lim said.

“MPIC welcomes Sumitomo as a strategic stakeholder in the LRT1 project along with its current partners AC Infrastructure Holdings Corp. and Macquarie Investments Holdings (Philippines) Ltd.,” said MPIC chair Manuel V. Pangilinan.

“This investment by Sumitomo is a welcome illustration in their belief in the future of this project. We are all eager to resume operations of LRT-1 when the current extended quarantine is released.”

The deal came at a time that Pangilinan’s group has come to better terms with President Duterte, who had apologized for hurtful words against the businessman in relation to the Maynilad Water Services concession.

Eita Fujikawa, Sumitomo’s general manager for transportation systems and infrastructure business department, expressed optimism on the partnership with MPIC and the investment in the LRT1 project, adding this would be an opportunity for the Japanese conglomerate to contribute to the development of rail infrastructure in the Philippines. —Doris Dumlao-Abadilla