Ayala, Metro Pacific to Form Alliance for Rail Projects
Ayala Corp. (AC) and Metro Pacific Investments Corp. (MPI) agreed to form a partnership to bid and develop light rail projects in Manila, stepping up competition for companies such as San Miguel Corp. (SMC) to build infrastructure.
They will own 50 percent each in the rail projects and related real-estate developments, Ayala and Metro Pacific said in a joint statement today. The alliance will initially bid for so-called public private partnership projects, it said.
Philippines plans to offer as many as 18 projects worth more than 200 billion pesos ($4.7 billion) to companies this year as President Benigno Aquino aims to create jobs and spur the $200 billion economy after growth slowed to a two-year low in 2011. Ayala and Metro Pacific said they have delivered public utilities such as water infrastructure services and toll road operations and will be able to use these capabilities.
“Each of these companies brings something to the table,” said Jomar Lacson, an analyst at Campos Lanuza & Co. “In many ways, their assets and strategies are mutually beneficial and the partnership makes sense.”
Ayala and businessman Manuel Pangilinan’s Metro Pacific had first come together in 2010. They joined First Gen Corp. (FGEN) in a venture that bid for a 246-megawatt hydroelectric power plant in Bulacan province. Eight years before that, Ayala Land and its partner acquired control of the 240-hectare Fort Bonifacio project from Metro Pacific for $90 million.
The two companies see opportunities as Philippines seeks to improve its light rail transit system.
“The existing system is over capacity and under invested - - the need to improve the existing rail systems now cannot be overemphasized,” Pangilinan said in the statement.
San Miguel, the Philippines’ largest company, plans to bid for a 60 billion-peso contract to extend a Manila commuter railway line to Cavite, a province neighboring the capital, President Ramon Ang said in February.
Ayala, which owns the nation’s biggest builder, seeks to expand into airports and railways, and will boost capital spending by 38 percent this year to a record 91 billion pesos, Chairman Jaime Augusto Zobel said in March. It won the first road project offered by Aquino’s administration to investors in December.
Pangilinan, who is the chairman of Metro Pacific, said in November the company may bid for Manila’s 30-year old international airport which the government wants to sell or revamp. A sale may bring in as much as $2.5 billion.