DBP eyes sale of MRT 3 stake

MANILA, Philippines - The state-run Development Bank of the Philippines (DBP) said it is looking to sell this year its 75-percent stake in the 17-kilometer Metro Rail Transit 3 (MRT 3) that could fetch about $400 million.

This, as the government financial institution is targeting its 2012 net income to reach “at least” P4.2 billion, or five percent higher than the P4 billion it achieved last year.

“It can be bigger if we can dispose of some big-ticket assets such as the MRT 3,” Francisco F. del Rosario Jr., DBP president and chief executive officer, said. “However, that would only be a one-time gain.”

He said the entire prospective amount could reach $679 million if the remaining government stake held by the Land Bank of the Philippines (LBP) is included.

Del Rosario said the sale would be through a competitive bidding.

 “We all know that the major players are extremely interested in the government stake, that include the Metro Pacific Group of Manuel V. Pangilinan, the San Miguel Group led by Ramon S. Ang, and the Ayala Group.

The Metro Pacific Group is also making a bid for the operations and maintenance (O&M) services for the Metro Railway projects.

The DBP executive also said they would be issuing this quarter P7 billion worth of unsecured notes that will qualify as Tier 2 capital. The fresh capital will be used for its developmental loans for the year.

The bookrunners and arrangers of the notes are BPI Capital Corp., BDO Capital Corp., ING Bank and Deutsche Bank.

DBP has turned over P4 billion to the government representing its dividend covering the 2010 and 2011 period. GFIs are required by law to turn over 50 percent of its annual earnings to the National Government in the form of dividends.

That resulted in lower retained earnings for the bank, which is the reason for the issuance of the debt paper. The additional capital is also required to ensure a capital adequacy ratio (CAR) of 17 percent.

 “Money raised from the debt paper and the possible asset sale will feed our development lending program,” the DBP executive said.

The priority lending of DBP will be in infrastucture and logistics-related activities, social services, and environment.

Yesterday, the bank launched the P20-billion Connecting Rural and Urban Intermodal Systems Efficiently (CRUISE), a program centered on the transport and logistics sector aligned with the Philippine Development Plan 2011-2016, which focus on the creation of intermodal and multimodel national transport and logistics system.