The story of Ayala started 187 years ago in a two-story wooden building along Echague Street in Quiapo, Manila as Casa Roxas, a business house that built a distillery to derive greater value from cane sugar.
Since then, the story of the country’s oldest conglomerate has had many twists and turns, a narrative that shares in the nation’s past and the global economic downturns the country faced.
Today, yet another chapter unfolds in Ayala’s saga as its long time CEO Jaime Augusto Zobel de Ayala or JAZA passes on the baton to his younger brother Fernando after 26 year of being at the helm.
JAZA, however, will remain as chairman, saying he and Fernando will continue to chart Ayala’s path forward in tandem.
Fernando has accepted the challenge but not before thanking JAZA for leading the conglomerate for the last 26 years, crediting him for the company’s “outstanding track record of creating shareholder value.”
“Since 1995, our market capitalization has expanded more than sixfold; our net income similarly grew more than six times. Since 1995, we rewarded our shareholders with dependable returns that averaged at 15 percent per annum. Over that period, we cumulatively paid P118 billion in dividends to our common shareholders,” Fernando said.
Five-point legacy
But more than the numbers, Fernando said JAZA is credited for his five-point legacy, upon which Ayala will build and propel sustainable returns for generations to come.
First is a portfolio mix that is stronger, expanded, more diversified, and balanced.
Second is a culture of relevant and relentless innovation, one that constantly seeks to disrupt and spark new industries.
Third is rigorous financial management discipline.
“This has enabled us to make decisive investments to capitalize on opportunities and provided risk-resilience in times of crisis; including the challenges of the current COVID-19 crisis,” Fernando said.
Fourth is Ayala’s pioneering efforts to align its ambition and metrics with world-class standards for sustainability and environmental, social and corporate governance.
“And fifth, with a clarity of purpose and constancy of action, Jaime led in placing Ayala at the forefront of the evolving role of corporations to address society’s pain points, to create inclusive and sustainable prosperity for all stakeholders, and to aid in nation-building,” Fernando said.
Regulated businesses
Indeed JAZA’s legacy has a lot to do with diversifying Ayala’s portfolio. He bravely led Ayala in going into highly regulated businesses – water, telecoms, energy. His father, Don Jaime, advised him against it, JAZA once told me in an interview, but he said being in such businesses concerned with Filipinos’ basic needs, “could make a difference.”
With JAZA at the helm, Ayala became leaders in these areas and business was largely smooth sailing until Duterte happened.
The president, calling the water concessions onerous and disadvantageous to the government and consumers, had the contracts amended. It’s partly the reason the Zobels partnered with fellow tycoon Enrique Razon--who knows politics and the regulatory environment in the country well--in Manila Water.
A young CEO
JAZA, as the seventh generation Ayala honcho, became the conglomerate’s CEO at the young age of 35 when his father retired in 1994.
He is lucky to come at the time when his father Don Jaime and uncle, the late Enrique Zobel – and of course their predecessors before them – have already transformed Ayala into a sprawling business empire out of that small distillery. Plus, the story of the Philippines, under then president Fidel V. Ramos, seemed to be promising at the time; one of renewed hopes and dreams.
It was a long way from Ayala’s beginnings in 1834. Entrepreneur Domingo Roxas and his young industrial partner, Antonio de Ayala, created a company that would engage in agribusiness, so goes Ayala’s history.
That distillery later on exported various products to Europe.
“When a Spanish royal decree established El Banco Espanol-Filipino de Isabela II as Southeast Asia’s first private commercial bank, Antonio de Ayala was appointed director representing the Manila business community. Thus, began Ayala’s involvement in banking. Banco Espanol Filipino -- which issued the first Philippine paper currency -- later became Bank of the Philippine Islands,” Ayala said.
Many decades later, between two world wars and a global economic recession, Ayala went into real estate development.
Hacienda Makati
Parts of the Hacienda Makati were parceled and developed into posh and gated subdivisions. When the family’s assets were apportioned in 1914, the Makati property went to the cousins Jacobo, Alfonso and Mercedes Zobel de Ayala. They and their successors would bring Ayala to where it is today.
Mercedes’ husband, Col. Joseph McMicking. provided a new vision for Ayala and for the development of what remained of the Ayala property in Makati into what would later emerge as the country’s first modern central business district.
Col. McMicking and his successors in management, Jacobo’s son Enrique and Alfonso’s son Don Jaime, would steer Ayala to great success in the 20th century.
JAZA continued this success, and in recent years, added new and essential businesses like healthcare and education. Perhaps this is what he meant every time he talks about “shared prosperity” and a “reimagined capitalist system.”
But in this extremely difficult time for our country today, only time will tell how far and how much of Ayala’s unparalleled success will trickle down to its stakeholders and to the greater Filipino population.
Iris Gonzales’ email address is eyesgonzales@gmail.com. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com