Henry Sy's SM lukewarm on participating in PPPs
MANILA, Philippines - The SM Group is "considering" participating in public-private partnership (PPP) projects, but is worried that intense competition may affect their profitability.
"We as an SM group are considering (various investments)… I'm sure if there's an opportunity, we'll be there. If there's money to be made there, why not," Henry Sy Jr., son and namesake of the group's patriarch, said at a press conference on Wednesday, April 25.
Sy Jr., however, did not appear excited about PPP projects. He said, "Right now, of course, if you ask my personal opinion, these projects are very much sought after so competition is very intense. When competition gets so intense, profit margin may suffer a bit."
A double-headed competitor is casting a large shadow over the upcoming bidding for the PPP contracts to manage and operate Metro Manila's main rail systems, the Light Rail Transit lines 1 and 2 and the Metro Rail Transit 3.
Ayala Corp. and Metro Pacific Investment Corp., 2 of the country's biggest conglomerates, signed an exclusive agreement on April 24 to partner and split interest 50/50 for the much anticipated rail projects to be auctioned by the government.
The projects are outside of the core businesses of the SM group. "Our core businesses as you know is the mall, retail, banking, property and tourism," said Jose Sio, CFO of the Sys' holding company SM Investments Corp.
But he pointed out that SM has been branching into new sectors such as mining.
Sio said, "We have invested in the mining sector. We have investments also in the construction business. But that is not our core business so we are there as an investor."
Last year, SM bought a 17.9% stake in Atlas Consolidated and Mining Development Corp., which owns a large copper mine in Toledo, Cebu province.
Even if the SM group doesn't participate in the bidding for PPPs, they may be involved in the financing, said Sio.
"Our bank, Banco de Oro, is heavily involved in giving financing to big-ticket items, including the PPP projects." - Rappler.com