Metro Pacific Investments: Holding and investment

The Company

Metro Pacific Investments Corporation (MPIC) is an infrastructure-focused investment and management company based in the Philippines. Its portfolio currently consists of toll roads, power and water projects, health care facilities and rail. It also has a presence in Thailand and Vietnam through its toll roads business. MPIC was incorporated and listed on the Philippine Stock Exchange (PSE) in 2006. At the end of 2014, its assets totalled P234bn ($5.2bn) and it is among the top-25 largest listed companies on the PSE.

Development Strategy

In November 2006 the conglomerate started its acquisition spree by establishing a 50:50 joint venture with DMCI Holdings in order to acquire an 83.9% interest in water services firm Maynilad. During the following year, MPIC ventured into the hospital business by subscribing to P750m ($16.7m) convertible notes, which is equivalent to a 33% equity stake in Medical Doctors. In November 2008 MPIC completed its purchase of a 99.8% stake in Metro Pacific Tollways Corporation, its first venture in the toll roads business. The conglomerate also entered into the electricity distribution segment after it acquired 14.7% of Manila Electric Company in October 2009, which it later increased to a 35% stake.

MPIC’s latest venture is focused on a rail project after its consortium with Ayala Corporation, Light Rail Manila Corporation (LRMC), was awarded the 32-year concession for the operation and maintenance of LRT Line 1. LRMC was also awarded the construction contract for the LRT Line 1 extension project, which includes eight new stations that will traverse the cities of Paranaque, Las Pinas and Cavite. MPIC has a portfolio that includes: seven toll roads, a power distribution franchise which serves a total of 5.6m customers, a water concession serving 9.8m households, 10 health care centres, and one rail line and collection fare system.

The conglomerate’s venture into different infrastructure-related businesses has resulted in stable and diversified income sources. In 2014 Maynilad accounted for 43.4% of MPIC’s operating income, while the power business only contributed 30%. The toll roads accounted for 22.2% and the hospital segment contributed only 4.6%.

Looking Ahead

MPIC is still aggressively participating in public-private partnerships. The conglomerate is slated to participate in two bundled airport projects with a total estimated cost of P116.3bn ($2.6bn). Following its entry in the rail segment, MPIC is bound to resubmit its proposal for the expanded operations of the existing Metro Rail Transit 3. MPIC is also interested in the financing, design, construction, operation and maintenance of the Makati-Pasay-Taguig Mass Transit System Loop, with an estimated cost of P378.3bn ($8.6bn). In addition, the conglomerate is keen on the North-South Railway project, which involves upgrading the existing railway.

The conglomerate has hinted that it is open to an initial public offering (IPO) for its hospital, with the proceeds going to assist MPIC in its goal of bringing its in-hospital bed capacity from the current 2200 beds to 4000 in two to three years. MPIC’s largest business, Maynilad, continues to expand with unserved customers totalling 800,000 households, or 9% of its West Zone concession clientele. In addition, there is a pending arbitration case against the government with regard to the delay in tariff implementation. MPIC’s indemnity claim amounts to P7bn ($210.7m).

Given the list of existing and pipeline projects, MPIC is well-positioned to see sustainably growing income. MPIC’s main edge over other the conglomerates is that its businesses form the core of the country’s infrastructure backbone, which translates into a relatively stable revenue stream.