Ayala eyes more unsolicited infrastructure proposals
AYALA Corp., the country’s oldest conglomerate, plans to take on big-ticket infrastructure projects and venture into the logistics business, while navigating a rapidly evolving global business landscape.
In a briefing after its annual stockholders’ meeting in Makati City on Friday, AC Infrastructure Holdings Corp. President and Chief Executive Officer Jose Rene D. Almendras said the conglomerate intends to offer two more unsolicited infrastructure proposals to the government, one of which is a “sizeable” transport-related project in Mindanao.
“This government’s openness to unsolicited proposals would produce some interesting potential opportunities. It’s really where the private (sector) sees an opportunity and the government decides if this dovetails with the development needs of the country,” Ayala Chairman Jaime Augusto Zobel de Ayala said.
Ayala has received official acknowledgement from the Department of Public Works and Highways (DPWH) on Thursday for its unsolicited proposal with SM Investments Corp. to build a P25-billion elevated tollway dubbed as the C3 Expressway, Mr. Almendras said.
Ayala and SM may accommodate more than two companies to join the consortium that will build the project connecting the SM Mall of Asia in Pasay City to Sta. Ana, Manila, he said.
The conglomerate is likewise “very interested” in the logistics business following the group’s acquisition of a combined 49% interest in Zalora Philippines, the country’s largest online fashion platform.
“What’s exciting about the Zalora investment which, on the surface, is an e-commerce platform, but underlying it is an engine that has been built from scratch to take goods from one point in the country to another and that is the beginning of a logistics and production chain,” Mr. Zobel said.
“Today, it serves Zalora only, but obviously there are potential businesses we can get into (because of that). We’re not sure where it leads to but it’s an interesting idea to look at,” Ayala Chief Finance Officer Jose Teodoro K. Limcaoco said, noting that the venture is expected to be profitable by 2019.
Ayala’s investment in Zalora and Mynt, an online and mobile payment service provider, will allow the group to ride on the e-commerce wave, which is expected to take off given the young population and high usage of internet and mobile phones in the country.
BULLISH ON PHILIPPINES
In the past five years, the Ayala group expanded its core businesses in real estate, banking, telecommunications and water distribution, while embarking in new business initiatives in power, infrastructure, industrial technologies, healthcare and education.
These emerging businesses are expected to strengthen its competitive advantage, maintain its relevance to its markets and establish a foundation for long-term growth and value, as the holding firm aims to rake in a net profit of P50 billion by 2020.
“If you look at the amount of (capital expenditures) that we’re looking at this year, it’s an indication of how bullish we feel about the economy. It is across the group,” said Ayala President Fernando Zobel de Ayala, referring to its P185-billion spending program for the year to expand its business units.
“The results have been good, we’re bullish about the economy and we’re expanding at a quick rate.”
The conglomerate’s optimism comes at a time when the global economic and political landscape is shifting, driven by trade protectionism. While some nations may embrace a protectionist policy, natural business and and market forces will keep encouraging globalization.
“That’s just the way things are,” Mr. J. Zobel said.
So far, the global wave of protectionism has yet to make a significant dent on the Philippines, he said, with the strong domestic consumer demand shielding the economy from its impact.
The Ayala group believes the government’s independent foreign policy that paved the way for improved ties with China bodes well for the country.
President Rodrigo R. Duterte is set to attend the One Belt, One Road Summit -- aimed reviving an ancient silk road trading route that would connect Asian markets with economic circles in Europe -- in China next month.
“If we become part of that infrastructure investment network that China is building, continue the globalization trend that has taken place and the Philippines becomes a part of it, then I think it augurs well for our country,” Mr. J. Zobel said.
The Ayala group welcomed competition from foreign companies setting up shop to ride on the Philippines’ stellar economic growth run, noting that the country trails its neighbors in terms of job-generating foreign direct investment.
“I never look at this as a zero-sum game. I think that any investment that comes to the Philippines is good for all of us. Any tide that rises will bring all the boats with it,” Mr. J. Zobel said.
Shares in Ayala rose P1 or 0.12% to close at P861 apiece on Friday.