Ayala Corp. is interested in selling LRT-1 stake to Villar Group

Bilyonaryo [link] is reporting from a source that Ayala Corp. [AC 680.50 unch; 222% avgVol] is interested in selling its 35% stake in Light Rail Manila Corp. (LRMC, the parent of LRT-1) to Manny Villar, but that Metro Pacific Investments (MPI), AC’s co-investor in LRMC, has a right of first refusal. While MPI sold part of its stake to Sumitomo in 2020, reducing its holdings to 35.8%, Bilyonaryo is reporting that MPI has expressed an interest in growing its stake in LRMC if certain fare hike issues are resolved. 

 

MB bottom-line: If this is part of AC’s movement away from government-regulated businesses, as Bilyonaryo is reporting, then it makes sense for it to sell a stake to a more politically motivated/connected buyer like Manny Villar. It makes less sense for MPI to exercise its right of first refusal, in part because it’s not clear whether those fare hike issues can be resolved in time to make a decision, but also because MPI itself is one of those companies that has also tried to reduce its government-regulated footprint. Both the Zobel Family and (to a lesser extent) MVP were targeted by the Duterte administration as part of a populist show of force regarding water concessions, and MVP was the only one of the two that came out of that fiasco talking about needing to protect itself by getting some distance from the government. Maybe things have changed since MPI was delisted. Maybe getting off the market has emboldened MVP.

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