MANILA – Adding to the core businesses of water, power, rail, toll roads and hospitals, Metro Pacific Investments Corporation continues to make its mark in logistics space, the flavor of the moment for the country’s conglomerates.
The attraction, company chairman Manuel V. Pangilinan told stockholders, is that of significant opportunities in an unregulated space.
The conglomerate entered the logistics business last year, spinning off Metro Pacific Movers and snapping up a number of mid-sized players in a P2.17-billion shopping spree.
“We think it’s a catalyst for economic activity, and is one of the deficits in the overall ecomomic structure that has got to be addressed,” Pangilinan said of the growing sector.
He said that the group was mulling over a tie-up with a foreign partner to help run the logistics business, but this was not something eyed in the short term. “…To improve the overall logistics program of Metro Pacific . . . I think we would need help from a strategic partner who has been doing it for many years and has been doing it well and has heavy IT in their process.”
Pangilinan confirmed talks are also ongoing with logistics firm Air21.
Besides MPIC, two other conglomerates have invested big in logistics: Ayala via the acquisition of online retailer Zalora, which has a sprawling distribution network, and SM that bought a 34.5-percent stake in the 2Go Group.
Beyond the new revenue stream, venturing into logistics is also expected to boost MPIC’s operational efficiencies.
In the view of equities analyst Rens Cruz of Regina Capital, “How we see logistics is not a single unit separate from the others. It’s more like the spine that would interconnect the existing units so again, we don’t see it as contributing more to the revenue side but actually to the reduction to the expenses of the consolidated parent, so that’s what we wanted to see.”
Given a raft of delayed tariff adjustments weighing on MPIC’s water, toll road and power units, it’s easy to see why a segment with no regulatory issues is of great appeal to the conglomerate.
Betting on Mindanao, despite odds
Meanwhile, MPIC is set to announce a major investment project in Mindanao, notwithstanding anxiety over the imposition of martial law on the island.
Pangilinan flagged the move during the firm’s annual stockholders’ meeting but declined to provide other details. “You should expect an announcement pretty soon,” he said.
He admitted concerns over the imposition of martial law, but said Metro Pacific remained confident over the island’s long-term prospects.
“It is a cause for concern so we need to understand the situation probably better, but we need to have faith in the country and the leadership. So most likely it will proceed kasi it’s a long-term investment.”