Private investors eye government stake in MRT-3

MANILA, Philippines - Private investors have expressed interest in acquiring the government’s controlling stake in Metro Rail Transit-3 (MTR-3), a ranking Finance official said yesterday.

Finance Undersecretary Rosalia de Leon said that with many private groups expressing interest, the government, through the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (Landbank), may again sell its stake in MRT-3 so that the two banks can beat the October deadline set by regulators.

Sources said DBP and Landbank will sell their stake in MRT-3 to the National Development Co. (NDC), a government owned and controlled corporation (GOCC). The NDC will issue government bonds as payment for the equity of DBP and Landbank.

However, the two GFIs will only deal in sovereign bonds with returns of at least seven percent, the same sources said.

De Leon said the plan is for the NDC to issue bonds and raise funds to “take out” the stake of both DBP and Landbank.

“Right now we are discussing some possible options for modality of take out including the NDC option,” de Leon said.

She said the take-out proceeding must be completed by October this year because of a requirement by the Bangko Sentral ng Pilipinas (BSP), which is exercising its regulatory function over the two government banks.

 “We’re offering it to the private sector. Many have expressed interest,” de Leon said. However, she declined to name the interested investors.

De Leon nevertheless said the bond issuance by NDC remains an option.

If the “take-out” plan via the private sector pushes through, the government will also have to guarantee 100 percent control of the MRT-3 before turning it over to the new private sector group.

Early this year, Landbank and DBP acquired majority control of the MRT-3 by shouldering 50-50 of the purchase cost estimated to be worth between $800 million to $900 million.

Finance sources, however said the more feasible option was for NDC to raise bonds and immediately take out the stake of DBP and Landbank so that they can comply with the October deadline.

Sources said that the “private sector route” would also mean that the government would have to hold a bidding, which, in turn, could take time.

MRTC is previously majority owned by a holding company, MRT Holdings Inc., a consortium that originally consisted of Ayala Land Inc., Anglo Philippines Holding Corp., Fil-Estate Management Inc., Ramcar Inc., and Greenfield Development Corp.