Under intense political pressure and threat of legal sanctions, Metro Pacific Investments Corp. is recalibrating its investment strategy and turning to real estate, tourism and logistics as its new growth drivers.
MPIC said the growing pressure from government has taken a toll on its utility firm Maynilad Water Services Inc.
“In these circumstances, questions have been raised regarding investment in Philippine- regulated infrastructure and the sources of capital to support this. There are no quick or easy answers to these questions but the current model of a listed infrastructure business with a wide pool of dedicated Philippine and foreign shareholders putting their faith in these long-term contracts needs serious review,” said MPIC chairman Manuel V. Pangilinan.
President Duterte has ordered the renegotiation of long-agreed contracts of Manila Water Co. and Maynilad to supply Metro Manila until 2037. He even threatened to jail owners of both utility firms.
Apart from this, Maynilad and Manila Water were fined nearly P2 billion for violating the Philippine Clean Water Act.
“Maynilad is currently unable to pay dividends, thereby forcing MPIC to recast its investment program in light of lower inbound cash flow, higher regrowing regulatory risk, and the resulting and self-evident lack of investor enthusiasm…,” said Joey Lim, president of MPIC.
” Ironically, even though there is huge demand for the services we provide, our discretionary investment spending beyond committed infrastructure projects will divert to less risky businesses like warehousing, real estate, and tourism,” Lim said.
Pangilinan said while MPIC reported a 69% suege in its 2019 profit, its share price continued to suffer gripped by increased pressure from regulatory authorities.
“Our record of consistent growth in earnings and book value per share – the latter at ₱6.05 at 31st December 2019 – is not translating to share price performance. While we might attribute some of this to market factors and some to conglomerate discount, the discount (so we are advised) reflects concern on political developments”, Pangilinan said.