AC expects delivery platform to boost logistics business

AYALA CORP. (AC) aims to grow its newly formed Entrego delivery platform into one of the leading third-party logistics players in the future, as the conglomerate further ramps up its investments in the country’s booming logistics sector.

The listed conglomerate disclosed earlier this month that its wholly owned subsidiary AC Infrastructure Holdings Corp. will be forming an investment holding company with German firm Brillant 1257 GmbH & Co. Vierte Verwaltungs Kg — an affiliate of online fashion platform Zalora — to manage its logistics units.

AC Chief Finance Officer Jose Teodoro K. Limcaoco said the new holding firm will carry the operations of logistics firm Entrego, which currently handles the last mile deliveries for Zalora.

“It’s a spin-off out of Zalora. We took the whole last mile operations of Zalora, we spun it off to a separate joint venture with our partners in Zalora where Ayala will now own 60%,” Mr. Limcaoco told reporters on the sidelines of the Advancing Business Communities Summit of the Aboitiz Group in Taguig City yesterday.

AC Infra will hold a 60% interest in the new firm, with the remaining 40% to be held by Brillant.

“Hopefully it will be one of the leading 3PL (third-party logistics) in the future, that’s the ambition,” he added.

Aside from Zalora, Entrego also serves external clients with logistics needs. The group is looking at further increasing Entrego’s capacity in order to expand beyond last mile deliveries.

“Entrego looks not only at last mile, they’ll do contract logistics, they’ll do fulfillment, and everything else, the full logistics value chain,” Mr. Limcaoco said.

Mr. Limcaoco said Entrego can also complement the other business units of the Ayala group, which has core investments in real estate, telecommunications, banking, water, automotives, health and education.

He said the success of a logistics business, especially last mile, is about improving delivery density.

“The more you can deliver in a certain area, the better. Zalora already provides a lot of density, and if you can get other businesses to come in, you can get Globe and BPI in,” he said, referring to AC’s telco player Globe Telecom, Inc. and banking unit Bank of the Philippine Islands.

Asked why the Ayala group is bullish on the logistics space, Mr. Limcaoco said the business is important in driving growth to other parts of the country.

“We think it’s an industry that needs to be transformed, it’s an industry that the country needs and has a lot of potential and underserved issues . . . This industry is ripe for disruption, which I think other conglomerates also see the opportunity,” Mr. Limcaoco said.

Other conglomerates have also been rushing to stamp their presence in logistics, including Metro Pacific Investments Corp. which has recently acquired logistics firm Air21 and the Sy-led SM Group which acquired integrated transport solutions provider 2GO Group, Inc.

AC’s net income attributable to the parent rose by seven percent to P16.1 billion in the first six months of 2018, after revenues jumped by a fifth to P148.7 billion during the same period.

Shares in AC gained 0.84% or P7.50 to close at P905.50 each at the stock exchange on Monday. —