Metro Pacific, Ayala to jointly pursue LRT projects

MANILA, Philippines—The Metro Pacific and Ayala groups have formed an “exclusive” alliance to pursue and develop light railway transit (LRT) projects in greater Metro Manila, beginning with the ones included in the government’s public-private partnership (PPP) framework.

This partnership signed on Tuesday is seen forming a greater financial muscle to pursue hotly contested railway projects such as Metro Railway Transit-3 upgrade and rehabilitation and the LRT-1 extension from Baclaran to Cavite. While the two groups have been bitter rivals in the telecommunications industry, analysts said they have been anticipating stiff competition in the infrastructure space and decided, therefore, to join forces.

Metro Pacific Investments Corp. and Ayala Corp. signed the memorandum of agreement on Tuesday to form this partnership, whereby each would own a 50 percent stake in the railway projects and related real estate development undertakings.

The partnership would plan to bid for the light rail transit projects identified under the government’s PPP but it would also consider working together on other rail-related opportunities, the statement said.

The last time the two conglomerates worked together was in early 2010 when they teamed up to bid for the Angat water project.

Glad to partner

Ayala chairman and chief executive officer Jaime Augusto Zobel de Ayala said: “We are glad to be partnering with the Metro Pacific Investments group for this specific purpose. We each have unique strengths and capabilities that, when combined, create a unique value proposition in rail development.”

“We hope to contribute meaningfully in helping raise the standards of our public utilities. This is vital to our nation’s progress and competitiveness. Developing an efficient mass transit system is a huge endeavor which will be better served by the synergies created by this partnership,” Zobel de Ayala said.

MPIC chairman Manuel Pangilinan said he was “pleased to share a common ground” with the Ayalas through light railway projects.

“This strategic alliance will create integrated solutions that will improve public transportation through our vision to transform the country’s light rail transit system into a network very much like those in Hong Kong, Singapore, Kuala Lumpur and Osaka,” Pangilinan said.

Under-invested

“The existing system is over capacity and under-invested – the need to improve the existing rail systems now cannot be overemphasized. Our initiative to join hands in addressing these concerns, signifies our commitment to help Filipinos become more productive and to contribute to the country’s overall infrastructure development and economic growth,” Pangilinan added.

Together, the Ayala and MPIC groups have a combined market capitalization of over P300 billion. These have developed a track record in running public utilities such as water infrastructure services as well as toll road operations and management.

“The combination of their experiences in these sectors, plus their individual expertise and capabilities in other areas, power distribution and healthcare in the case of MPIC, and large-scale mixed-use real estate projects in the case of Ayala, create a unique and powerful alliance that can bring immense value as the country seeks to improve its light rail transit system,” the joint statement said.