Ayala aims to finish divestments this year

AYALA Corp., the country’s oldest conglomerate, plans to sell non-core stakes in Manila Water Co. Inc. (MWC) and Light Rail Manila Corp. (LRMC) within the year as part of efforts to raise $1.0 billion in fresh capital.

“We closed 70 percent [of the $1.0-billion target]. One or two more deals, and we’re done,” Ayala Chief Finance Officer Albert de Larrazabal told reporters late on Friday.

He said the conglomerate was looking to raise up to $400 million by divesting of stakes in several assets, including remaining shares held in MWC and a minority stake in LRMC, which operates and maintains the Light Rail Transit Line 1.

The Ayala group plans to close the deals “within the next four to six months, but clearly within the year,” he said, adding that proceeds may even exceed the fundraising target.

The conglomerate now holds just a 23.5-percent economic stake in the water company, now led by ports and gaming tycoon Enrique Razon Jr., following a P5.7-billion transaction last year.

Razon, according to the Ayala executive, earlier expressed a “desire to consider” acquiring more shares in MWC as he was “extremely committed to the business and sees the potential.”

More investors have also expressed interest in the conglomerate’s stake in LRMC following a hike in LRT-1 fare rates last August, “We just got the fare increase recently, so now it looks a lot more valid. There is increasingly more interest.”

Ayala, through AC Infrastructure Holdings Corp., currently has a 35-percent stake in LRMC, a joint venture with three other firms: businessman Manuel Pangilinan’s Metro Pacific Light Rail Corp., Japan-based Sumitomo Corp., and the Philippine Investment Alliance for Infrastructure’s Macquarie Investments Holdings Pte. Ltd.

Pangilinan had “indicated interest” in acquiring Ayala’s shares in the joint venture, but de Larrazabal clarified that the parties were “not anywhere close to a final decision one way or the other.”

LRMC signed in 2014 a P65billion, 32-year concession agreement with the Department of Transportation and the Light Rail Transit Authority to assume operations of the train line.

Ayala’s share price rose by P1.00, or 0.14 percent, to P709 last Friday, while Manila Water shares dropped by 16 centavos, or 0.84 percent, to P19 each.