Ayala Corp eyes LRT-1 extension project

Katherine Visconti
It says it may bid for the project even if it takes up to 15 years to become profitable

MANILA, Philippines – Ayala Corp., the country’s oldest conglomerate, expressed interest in bidding for a public-private partnership (PPP) project to extend the Light Rail Transit Line 1 (LRT-1)

Eric Francia, Ayala’s Head of Corporate and Strategy Development, said they are now in talks with potential partners for the project, which involves extending LRT-1 from Baclaran, Pasay City to Bacoor, Cavite.

“We think that’s the most imminent (PPP), LRT-1,” said Francia after the company’s shareholders meeting on Friday, April 20. 

The over P60-billion project will likely be the next PPP to be bid out, with the bidding potentially starting by the end of April, according to Transportation Secretary Manuel “Mar” Roxas.

A BusinessWorld report quoted Roxas as saying that P30 billion for construction of the project would be shouldered by the private sector, while another P30 billion would be spent on 152 train coaches to be acquired from Japanese firms also through bidding.

Ayala chairman and CEO Jaime Augusto Zobel de Ayala said, “So much depends on the PPP, (with) what the government puts out… We’re interested in the road networks that are being built and the broader area of transportation as a whole is of interest to us. We expressed an openness to participate in airports and perhaps the public transport space.”

But Francia said that while Ayala is “looking forward” to the bid announcement, “we need to look at the bid documents and terms of reference before deciding to bid, but suffice it to say, we are considering it.”

Zobel explained that infrastructure investments, like LRT-1, could take 10 to 15 years to become profitable. Should they win the bid, that would be an acceptable amount of time to wait for profits from the project.

“We’re a long-term oriented company,” he said.

Taking the cue from other conglomerates, Ayala is venturing into heavy industries outside its core businesses in a bid to create more shareholder value. 

Last year, it won the bidding for the government’s first PPP project, the Daang Hari-SLEX link road, and started getting into renewable energy joint ventures.

However, other diversified conglomerates — Metro Pacific Investments Corp. and San Miguel Corp. — as well as family-owned ones — the Aboitiz and Lopez groups — had the initial advantage in these sectors.

Ayala is engaged in property, banking, utilities, telecom, electronics manufacturing and business process outsourcing, among others. – Rappler.com