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Ayala developing new core businesses

Conglomerate Ayala Corp. is finding itself in more uncommon business grounds, after long been associated with property development, banking and shopping centers.

Ayala, the oldest family-owned company in the Philippines, since then has expanded to telecommunications, water distribution, electronics, power generation, infrastructure and hospitals. The group, through unit Ayala Education Inc., lately acquired a 60-percent interest in University of Nueva Caceres in Naga, Camarines Sur for P450 million. The Bicol school will emerge as Ayala Education’s flagship university.

Ayala’s bid to expand its business empire into non-core but equally profitable operations is just starting.

The Ayala Group now plans to venture into the broadcasting business to further boost the content of its unit Globe Telecom Inc. A partnership with broadcaster GMA Network Inc., or equity investment in the media firm, is not far-fetched.

“We are always looking for new opportunities on that front [broadcasting], the telecommunication business is changing, you have seen some of the arrangements that Globe has been reaching with entertainment companies,” Ayala chairman and chief executive Jaime Augusto Zobel de Ayala told reporters, when asked if his company was interested to invest in GMA Network, which airs on Channel 7 on free TV.

“The lines are blurring, it’s an exciting new area that’s developing on that front,” Zobel de Ayala said, adding his company was always in talks for possible partnership.

The Ayala group’s interest surfaced after the majority shareholders of GMA Network terminated year-long talks to sell a minority stake in the network to San Miguel Corp. president Ramon Ang.

The partnership or direct investment in GMA Network followed Globe Telecom’s successful bid to take over the ownership of Bayan Telecommunications Holdings Corp. from the Lopez Group. Lopez Holdings Corp. and BayanTel  have just agreed to sell to Globe all their equity in BayanTel for P1.83 billion.

Business partners

Ayala’s ambitious expansion program has driven the conglomerate to forge a possible partnership with another aggressive group. It confirmed talks with Metro Pacific Investments Corp. of Indonesian billionaire Anthoni Salim to jointly bid for the biggest railway project so far under the government’s public-private partnership program.

“We will continue to selectively participate in the auction of PPP projects. PNR [Philippine National Railways], we will definitely take a look at that, it is a massive project. We will do it in a consortium we’re now mobilizing in terms of preparing for that project,” John Eric Francia, managing director of Ayala, told reporters after the opening of the P2.2-billion Muntinlupa-Cavite Expressway Project, or MCX.

Francia said his company was in talks with Metro Pacific “but nothing has been formalized yet in terms of consortium.”

“We are definitely talking to partners and MPIC is the most advanced in that regard,” he said.

The Transport Department last week invited prospective bidders to join the auction for the P170.7-billion South Line of the North-South Railway Project. A two-stage bidding process will be adopted, with the pre-qualification date targeted within the fourth quarter of 2015.

Ayala is also looking at the P74.56-billion Ninoy Aquino International Airport Development Project to add to its growing infrastructure portfolio. It just completed the construction of the  four-kilometer MCX connecting the Daang Hari Road to the South Luzon Expressway.

Besides MCX, Ayala won the P1.7-billion Automated Fare Collection Systems for Metro Manila’s three overhead train system and the P64.9-billion LRT Line 1 Cavite Extension Project in partnership with Metro Pacific.

Unit Ayala Land Inc., meanwhile, forged a joint venture agreement with Entenso Equities Inc., a wholly-owned unit of Puregold Price Club Inc. of retail tycoon Lucio Co to develop and operate mid-market supermarkets for some of Ayala Land’s new integrated and mixed-use developments.

Ayala, in addition, has recognized the huge potential of the tourism and retirement business in the Philippines by joining the hospital sector. Its mixed-use communities, especially in high-end areas, will inevitably require hospital facilities for the elderly population.

Ayala has acquired Whiteknight Holdings Inc., which is wholly-owned by the Mercado family, and a 33-percent equity in Mercado General Hospital Inc. Whiteknight owns hospitals and ambulatory surgical centers in Batangas, Cebu and Manila, and is building another facility in Iloilo.

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