Philippines-listed water and wastewater services provider Manila Water Company Inc (Manila Water) is selling a 25 per cent stake to Prime Metroline Holdings, the infrastructure company of port tycoon Enrique Razon Jr., for 10.7 billion pesos ($210 million), according to a disclosure Monday.
The transaction comes after President Rodrigo Duterte lashed out at Manila Water over supposed “onerous” provisions in its government contracts and gave the company the option to accept government-crafted deals or be taken over.
In a statement, Ayala-led Manila Water said it has signed a subscription agreement with Prime Metroline for the acquisition of 820 million common shares at 13 pesos per share. The per-share deal value represents an about 7 pesos premium to the stock’s closing price of 12.16 pesos on Thursday.
Ayala Corporation remains a shareholder in Manila Water with a 38.6 per cent stake.
Manila Water said the fresh funds will support its capital spending program to improve the water and wastewater distribution system in Metro Manila east zone concession, comprising a broad range of residential, commercial and industrial customers.
Manila Water said its partnership with Trident Water “adds enormous value” to the company as it executes on its long-term strategic direction.
Philippine billionaire Razon is the chairman of port operator International Container Terminal Services Inc. He is a major shareholder Trident Water, a venture that seeks to develop a new water source for the Philippine capital.
“We expect this partnership to likewise help accelerate Manila Water’s regional aspirations given Mr. Razon’s solid experience in penetrating overseas markets,” Ayala president and COO and Manila Water Board Chairman Fernando Zobel de Ayala said.
Over the past decade, Manila Water has been establishing itself as a major water infrastructure player in Southeast Asia with investments in various platforms across Vietnam, Thailand, and Indonesia and is constantly on the lookout for opportunities in the region.
In 2018, the water services provider acquired an 18.72-per cent stake in Eastern Water Resources Development and Management Public Company Ltd, a publicly listed water supply and distribution company in Thailand.
Manila Water is also the largest direct foreign investor in Vietnam’s water sector after foraying into the country’s bulk water and concession projects. It has also completed pilot projects in Bandung, Indonesia for a non-revenue water reduction program, and in Yangon, Myanmar for leakage reduction.