The water concessionaire serving Metro Manila’s east zone said it sold a 25-percent stake worth P10.66 billion to businessman Enrique Razon.
Manila Water Co. has agreed to sell 820 million common shares for P13 apiece to Razon’s Prime Metroline Holdings Corp.
The transaction leaves Ayala Corp.’s stake in Manila Water Co. at 38.6 percent.
Manila Water said it will use the money to support its capital spending program to improve the water and wastewater distribution system in Metro Manila’s east zone concession.
The water distributor last week raised its authorized capital stock, allowing it to sell as much as 900 million shares to fund the expansion.
The per-share deal value represents a 6.9 percent premium to the stock’s closing price of P12.16 each on Thursday. Trading of Manila Water’s shares were voluntarily halted on Friday.
The sale comes as concession deals between the government and utility firms Manila Water and Maynilad Water Services Inc are being questioned and reviewed by President Duterte.
He called the 25-year concession contracts signed in 1997 “onerous and disadvantageous” for ratepayers.
Jaime Augusto Zobel de Ayala, Ayala Corp. chairman and chief executive officer, said of the sale: “Together, both our groups can provide a unique, holistic and long-term solution to providing predictable and dependable long-term supply to the growing needs of the east zone concession and likewise contribute to strengthening the infrastructure required to deliver an important resource to preserve the city’s livability and health at a time of growth and expansion in the metropolis.”
Zobel said in a statement Razon’s involvement in the water concessionaire can help the company’s regional aspirations with their solid experience in penetrating overseas markets.
“Mr. Razon’s successful global operations in economies around Asia Pacific, Latin America, Middle East and Africa is a testament to his strong ability to establish business leadership overseas and navigate the nuances and challenges that come with operating in new territories, including differences in culture, social structures, and economic development,” he added.
Manila Water is grooming itself as a major water infrastructure player in Southeast Asia with investments in various platforms across Vietnam, Thailand and Indonesia.
This is not the first time the two groups are collaborating. Razon-led Wawa JVCo Inc. is building a dam in Rizal Province, expected to start supplying an additional 80 million liters per day of water to Metro Manila by the end of 2021. In turn, Manila Water will treat the water and distribute it to Manila east zone customers.
Manila Water serves about six million customers in Makati, Pasig, Pateros, Marikina, Mandaluyong, San Juan, Taguig, some parts of Quezon City and Manila; and several towns in Rizal province that include Taytay, Teresa, Angono, Antipolo, Baras, Binangonan, Cainta, San Mateo and Rodriguez.
Astro del Castillo, managing director at First Grade Finance in Manila, said any new investor is welcome for Manila Water especially because of foregone rate increases and arbitration award.
“The risk is spread,” said Del Castillo.
Manila Water lost as much as $550 million, or nearly three-fourths, of its market value since Duterte lashed out at water concessionaires in December.
The company then pledged not to seek higher rates and a forego of a P7.4 billion arbitration award. – with Reuters
