April 21, 2017 11:55 pm JST

Ayala chairman mentions rail, real estate overtures from China

Endorses President Duterte's support for mainland's One Belt, One Road regional strategy

CLIFF VENZON, Nikkei staff writer

Jaime Augusto Zobel de Ayala, right, the chairman and chief executive of Ayala Corporation, said business with China is showing promising signs in the light of improved bilateral relations.

MANILA -- Ayala Corp. has been approached by companies from China about possible joint ventures in real estate and infrastructure -- a sign that the mainland's warming diplomatic relations with the Philippines is starting to bear economic fruit.

Jaime Augusto Zobel de Ayala, chairman and chief executive of one of the largest and most influential conglomerates in the Philippines, told reporters on Thursday that unspecified proposals are under evaluation.

Jose Rene Almendras, chief executive of Ayala's infrastructure arm, said there is particular interest in railway projects among the unidentified parties from China. In partnership with Metro Pacific Investments, Ayala runs a 20km light railway in Manila, and the two Philippine conglomerates intend to bid jointly for other rail projects in the capital.

Ayala is also on the lookout for rail projects beyond Manila, as well as any road and airport opportunities that come up for privatization. Ayala has Japan's Mitsubishi as a strategic shareholder.

It is not clear what kind of real estate projects might attract mainland Chinese investors, but the Ayala Land portfolio includes shopping centers, residential estates, condominiums, offices, resorts, and hotels.

Since entering office last June, President Rodrigo Duterte has defused a major territorial dispute with China in the South China Sea, and sought to mend bilateral relations. He intends to attend the Belt and Road Forum for International Cooperation in Beijing next month, which is part of China's strategy to promote regional trade.

Zobel endorsed Duterte's presence at the forum, and also the Philippines being part of China's "broader plan." He said it will increase the likelihood of investments in ports, airports, and other infrastructure "necessary for the Philippines to be part of that ecosystem."

Ayala already has investments and business dealings with China. Its electronics manufacturing unit has operations there, and its telecommunications and energy subsidiaries use mainland contractors. In February, Alibaba's Ant Financial Services Group bought 45% of Globe Fintech Innovations, which is part of Ayala Group.

With warming diplomatic ties, China has agreed to fund various infrastructure projects, including a $3.1 billion railway project linking Manila with southern Luzon island. Chinese contractors are expected to play leading roles.

Chinese companies are also seeking involvement with state-owned Philippine National Oil Company for liquefied natural gas projects.

In another positive effect, Bloomberry Resorts, which owns the Solaire Resort and Casino in Manila, has reported an upturn in visitors from China since Duterte's visit to Beijing in October.

Asia300

Bloomberry Resorts Corp.

Philippines

Market(Ticker): PHS(BLOOM)
Sector:
Industry:
Consumer Services
Casinos/Gaming
Market cap(USD): 2,098.28M
Shares: 11,001.7M
Asia300

Ayala Corp.

Philippines

Market(Ticker): PHS(AC)
Sector:
Industry:
Finance
Financial Conglomerates
Market cap(USD): 10,394.4M
Shares: 621.19M
Asia300

Metro Pacific Investments Corp.

Philippines

Market(Ticker): PHS(MPI)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 3,888.77M
Shares: 31,505.3M
Asia300

Ayala Land, Inc.

Philippines

Market(Ticker): PHS(ALI)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 11,564.8M
Shares: 14,724.9M

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