The outlier is winning again?

An outlier in street language is one who is not one of the boys. One outlier is Ramon S. Ang, long considered outside of the exclusive club of the business elite.

After all, the Tondo boy has no credentials like most of them have from a fancy business school. They raise their pinky finger and snootily disparage him as just the “mekaniko ni Danding.” But RSA has run circles around them and Forbes ranks him as fourth in its list of top Filipino taipans with assets worth $3.4 billion. Only the Sy-blings, Manny Villar and Ricky Razon are richer.

No wonder there was an effort to disqualify San Miguel a few weeks ago in the public bid for the rehabilitation and operation of NAIA. They knew San Miguel under Ang’s leadership had this propensity of bidding high, of being an outlier among the other bidders. Of course, the other bidders want to bid as low as they can to maximize potential profits. But RSA always sees things differently.

For one thing, RSA bids to win. He did that for NAIAX, submitting a bid of P11 billion compared to Metro Pacific, the next bidder at P305 million. The Makati business elite made fun of him then. But RSA saw three things with NAIAX: first that it was badly needed. Secondly, it links perfectly with SLEX and Skyway Stage 3 which San Miguel runs and thirdly, he saw that the potential traffic count was too conservative.

RSA was proven correct. NAIAX is very profitable. And the actual traffic was a lot more so they are planning to add more lanes. As RSA used to say, the private sector bidders for PPP projects should not be greedy because PPP projects have an element of public service. Investors in PPP must think not just of their stockholders but of the greater public good the project will serve.

The Lopezes were the original outliers in public biddings for the privatization of government assets. In 2007, a partnership called Red Vulcan led by the Lopez-controlled First Gen Corp. won the 60 percent stake of government in PNOC Energy Development Corp., the entity in charge of geothermal development. The remaining 40 percent was owned by those who acquired shares through an initial public offering.

The Lopez Group made an offering of P58.8 billion with the next bidder FDC Geoenergy Holdings offering P45.08 billion, Panasia Energy Holdings made a P39-billion bid and AP Renewables submitted a bid of P33.165 billion.

The Lopez Group was criticized by business analysts for supposedly bidding too high. But Peter Garrucho who headed the energy group of the Lopezes justified their bid as the right one based on their computations of EDC’s value.

The Lopezes made an aggressive bid to win because EDC was a good fit in their energy strategy.

The same accusation was made when the Lopez energy group recently acquired Casecnan Hydroelectric Power Plant in Pantabangan in a $526-million winning bid, 230 percent more than the floor price. Aboitiz Power offered just a 13 percent premium over the floor price and EEI was 31 percent. A group of stock market investors even wrote to the board of directors of First Gen complaining that “its exorbitant bid price will erode shareholder value…”

But First Gen’s hydro group explained that its bid was motivated by: first its desire to acquire strategic assets that build on its renewable and low-carbon energy assets; and they also like to give the government a “fair and equitable return.” First Gen became an outlier in a bid to win.

The points raised by First Gen are about the same points RSA cites every time he makes an aggressive bid. First of all, they really want to win the project because it is a good fit in their business plans. And secondly, RSA does not believe in shortchanging the government. In this regard, he told me that he is bidding for NAIA also to keep the other bidders honest.

RSA doesn’t care much about the price of SMC stock in the short term. He thinks of long-term payoffs on his projects for his shareholders by producing some good for the country.

He is focused on infrastructure because he believes it will boost economic growth and that, in turn, will boost SMC sales. So, if you are picking stocks for an investment portfolio that must look good every quarter, stay away from SMC stocks.

RSA is not the typical CEO because his perspective is bigger than San Miguel. Lucky for him his major shareholders don’t seem to mind waiting.

So right now, SMC is leading the race for the contract to operate NAIA and is willing to give the highest government share of 82.16 percent of revenue. GMR Airports Consortium proposed to share 33.3 percent while the consortium of major taipans offered just 25.91 percent. Whoever eventually wins must also pay an upfront fee of P30 billion and annuity cost of P2 billion. The winner will get 15 years to run the airport, extendable by 10 years.

The consortium of taipans delivered a stingy bet even after they made two unsolicited offers which suggested they really wanted the project. But too many taipans can spoil a bid. And the heads of the conglomerates that make up the consortium are your traditional CEOs who are focused on bottom lines more than the public interest nature of the project.

There are talks now that SMC should be disqualified because their bid is not economically viable. But why should anyone, including government technocrats, know better than SMC what is viable to them? In any case RSA is responsible to his shareholders and he should know their risk tolerance.

Some are questioning the composition of the SMC consortium. But it’s unfair to disqualify on that point now after the key numbers have been made public. The assumption now is that all the remaining bidders are qualified. A disqualification of SMC will also mean the government will get a lot less for the privatization effort.

Good thing we have outliers within the business community. Keeps people honest.

Boo Chanco’s email address is bchanco@gmail.com. Follow him on X or Twitter