Ayala nears deal to exit LRT 1
Zobel family-led Ayala Corp. is closing in on the sale of its 35 percent stake in the Light Rail Transit (LRT) Line 1 and other non-core assets as the country’s oldest conglomerate looks to surpass the $1-billion fundraising goal it had set two years ago.
Alberto de Larrazabal, chief finance officer at Ayala, told reporters their exit from the LRT-1 might be concluded within the next four to six months amid ongoing discussions with potential buyers, such as railway consortium partner Manuel V. Pangilinan’s Metro Pacific Investments Corp. and private equity firms.
“What happened was we got the fare increase recently so [the LRT 1] now looks a lot more viable,” Larrazabal said during a chance interview on Friday.
“You’re getting interest coming in not, just [from] strategic [investors] but private equity guys,” he added.
Ayala’s divestment program includes the gradual sale of its shares in water concessionaire Manila Water Co. to billionaire Enrique Razon Jr. and the Muntinlupa Cavite Expressway to tycoon Manuel Villar Jr.
This move is aimed at refocusing its portfolio toward its core sectors such as property, telecommunications and renewable energy while expanding into emerging areas like health care and logistics.
Larrazabal said they are targeting to raise $350 million to $400 million, mainly from the sale of the LRT 1 stake and remaining 19.25 percent holdings in Manila Water. This means the conglomerate would exceed the $1 billion fundraising target, he said. Suitors
He said Metro Pacific, which co-owns 35.8 percent of LRT 1 operator Light Rail Manila Corp. (LRMC), is among those interested to buy their railway shares.
“[Pangilinan] indicated interest. We’re not anywhere close to a final decision one way or the other but he’s part of the consortium and he’s very involved,” he noted. Apart from Pangilinan, Larrazabal said they had “casual conversations” with Villar regarding the sale of the LRT 1 stake due to the tycoon’s vast landholdings where the LRT 1 extension is being built.
The LRT 1 fares—which had been untouched since the 2015 privatization of the railway line under a public private partnership scheme—were raised last year upon the approval of the Department of Transportation.
Fare hike delays forced LRMC to sue the government for about P2.7 billion in 2022 to help it recover losses amid the ongoing 11.7-kilometer LRT 1 extension to Niog, Cavite.
The state-run Light Rail Transit Authority said last year the LRT 1 extension would be opened by the end of 2024. Once completed, the LRT 1 will span nearly 32 kilometers. INQ
