The National Development Co. (NDC) plans to steer clear of risky startups by reviving its former business model of investing in heavy industries and manufacturing.
In an interview with Malaya Business Insight on Wednesday, Saturnino Mejia, newly-appointed general manager of the state-owned investment enterprise, said the NDC will take calculated risks in priority projects, in sectors like health, electric vehicles, waste-to-energy, shipping, renewable energy and agro processing.
So far NDC has exposures in two startup ventures: solX, the first digital energy solutions company for P11 million and Humble, a climate technology company, amounting to P5.7 million.
NDC would rather not place huge stakes in these projects to fulfill its role as an effective catalyst for growth, considering its funds are limited, Mejia said.
NDC earns from lease and dividend income from existing investments, the NDC official said.
The NDC has been tasked to manage the Startup Venture Fund (SVF), under Republic Act 11337, or the Innovation Startup Act, to help develop the Philippine startup ecosystem.
While the enterprise will continue managing SVF, it will not earmark money for the venture capital fund, Mejia said.
“The law said SVF should be funded by General Appropriations Act.
For direct loans, it is best that startups tap Small Business Corp.,” he added.
Mejia also said the NDC is bent on taking an aggressive stance when it comes to its land holdings, since the company is looking at the feasibility of selling its land, or going into joint ventures with land developers.
Its property assets across the country are valued at P28 billion. These are mostly used by American companies like Chevron, Shell and Goodyear under long-term lease agreements stated in the Laurel-Langley agreement, a trade deal between the Philippines and the United States signed in 1955.
NDC has other projects that are in the pipeline. These include a vaccine facility, a niche cancer care center, a hospital and waste-to-energy, gamma irradiation for agriculture.
Two projects have so far reached the advanced stage., Mejia said.
These are the P7-billion vaccine manufacturing facility of Glovax Lifesciences where NDC plans to place P50 million or 2.5 percent in equity, and P100 million in convertible notes. This project got conditional approval by the NDC board.
NDC has released P70 million for MTEK’s Biotechnology manufacturing facility that will produce commercial diagnostic kits for detecting infectious diseases.
In the 1970s, NDC, which functions as an investment arm of the Department of Trade and Industry, was the lead state-owned investment company, with exposures in basic industries like National Steel Corp., Philippine Phosphate Fertilizer Corp., Philippine Associated Smelting Corp., and Refractories Corporation of the Philippines.
Achieving a fair success in these investments, NDC decided to go for diversification and divested itself of some of those investments.
NDC has since diversified into bioenergy, hydropower, industrial estate and food terminals.
