Sale of Maynilad stake to Marubeni nears completion

MANILA, Philippines - The consortium of Metro Pacific Investments Corp. and DMCI Holdings Inc. said it expects to conclude negotiations for the sale of a combined 20 percent stake in Maynilad Water Services Inc. to Japanese trading giant Marubeni Corp. by September.

In a briefing following DMCI’s annual stockholders meeting yesterday, company president Isidro A. Consunji said they are close to finalizing a deal that will allow Marubeni to come in as a strategic partner in the West Zone water concessionaire.

The group is expected to raise around $400 million (roughly P17 billion) from the sale at a valuation of $2 billion for 100 percent of the utility firm.

Maynilad chief operating officer Herbert Consunji said Metro Pacific would keep majority control of Maynilad with a 52.8 percent stake after the divestment of around four percent.

DMCI, on the other hand, will be left with a 25 percent economic interest in Maynilad, he said.

Consunji said DMCI expects to receive P14 billion in gross proceeds from the sale, which will be used to fund new investments.

He said the company is looking to acquire nickel mines as it aims to expand its natural resources portfolio. A portion of the sale proceeds will also be used to fund its participation in the Public-Private-Partnership (PPP) program of the government.

He said Marubeni’s entry augurs well for the company as the Japanese firm is expected to provide cheap long-term money and new technology to further boost Maynilad’s operations.

Marubeni has been doing business in the Philippines for more than 100 years, serving various industries such as telecommunications, information technology, power, agriculture, transportation, construction, and metals. It has an extensive global network of human, financial and technological resources.

Maynilad earlier said it would invest about P50 billion through 2017 mainly to improve and expand water and reduce its non-revenue water (NRW) ratio resulting from leakage and theft.

The company has also been working hard to further widen its wastewater coverage from the current eight percent to 28 percent in five years. The figure is expected to go up further to 100 percent by the end of the concession period in 2037, Maynilad said.

Maynilad serves the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Ave. EDSA, Congressional and Mindanao avenues, the northern part starting from the districts of the Holy Spirit and Batasan Hills), Makati (west of South Super Highway), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon, all in Metro Manila; Cavite City and the towns of Bacoor, Imus, Kawit, Noveleta and Rosario, all in Cavite province.

Metro Pacific and DMCI took over operations of Maynilad from the Lopez family in 2007. The utility firm’s previous owner, Lopez Holdings Corp., retuned the concession after suffering tight liquidity problems.