By Chino S. Leyco, Reporter

AS some of the acountry’s largest conglomerates bask in the limelight with their aggressive push into businesses outside their core expertise, the Philippines’ oldest holding company has turned inward, at risk of being left out in the scramble for new moneymaking machines.
With more than P30.9 billion cash in hand, and a net debt-to-equity ratio of 0.09 at end-June this year, Ayala Corp. was well-positioned to buy up assets after prices all around fell due to the global financial crisis.

|So far the 175-year old company, however, has stayed out of the fray, leaving the field wide open for the likes of San Miguel Corp. and the Philippine Long Distance Telephone Co. (PLDT) group, which separately have been gobbling up companies whose valuations fell in line with the financial crisis.

In contrast, the Ayala group early this year reshuffled its key executives, sparking off a changing of the guards within each of its business units.

Rufino Luis Manotok, Ayala group senior managing director and chief finance officer, however, said the holding company continues to look at investment opportunities, such as in the power sector.
But to date, the group has yet to place a bet on the industry.

San Miguel and the PLDT group are angling to secure control over Manila Electric Co. (Meralco), as the Lopezes, who have held sway at the Philippines’ biggest electricity distributor, sell their crown jewel to trim down debt at the parent level.

San Miguel likewise bought power plants auctioned off by the government, as well as a controlling stake in the country’s biggest oil refiner, Petron Corp. The food and beverage company has also taken interest in a number of big-ticket infrastructure projects.

Metro Pacific Investments Corp. (MPIC), which like PLDT is controlled by Hong Kong-based First Pacific Co. Ltd., has bought up a string of hospitals and like San Miguel, is positioning itself in the largely state-subsidized infrastructure sector.

San Miguel and the PLDT group’s diversification also challenge the Ayala group’s bread-and-butter.
San Miguel’s foray into telecoms through its acquisition of Liberty Telecom Holdings Inc. puts it in a position to eat into Ayala-led Globe Telecom Inc.’s business. The food and beverage conglomerate also invested in the banking sector, a business where the Ayala group has been in for several decades.

Through MediaQuest Holdings Inc., the PLDT group has acquired control of the Philippines’ third-biggest
TV network, and maintains a minority interest in the country’s leading business newspaper. These moves provide the country’s leading telco both content and the means to attain the sought-after convergence in the information and communications technology space—work on which Globe has barely begun.

Besides highway construction, MPIC also bought a sizeable interest in Maynilad Water Services Co. Inc., which holds the concession to the western part of Metro Manila.

Ayala-led Manila Water Co. Inc. has the water distribution rights to the eastern part of Metro Manila.
Like the Ayala group, PLDT also has investments in the BPO space, which is a sunrise industry that promises to deliver hundred billions in revenues in less than a decade.

Market observers, however, said the House of Zobel de Ayala has nothing to fear from its more aggressive peers.

“The Ayala group is always exploring all possible businesses that it may get into,” Astro del Castillo, managing director at First Grade Holdings said.

Jun Calaycay of Accord Capital Equities Corp., said the Ayala group may have wanted first to solidify its businesses after the global financial crisis, before venturing into other pastures.
“They are always on the horizon,” Calaycay, however, said.

Amid a number of celebrated mergers and acquisitions (M&A) in the past two years, the Ayala group has been prudent in buying assets, other sources said, because the family’s billions were acquired through more than a century of hardship.

Insiders said other conglomerates that have been active in the M&A scene were supported by a “foreign billionaire” or associates of a “former dictator.”

“It’s easier to spend, if it is not your own money,” a source said.

The Zobel de Ayala clan emanated from northern Spain’s mountainous region of Álava, having descended from the lineage of Juan Larrazábal Ayala, an influential landowner. Their patriarch Antonio de Ayala had sailed for Manila in the 1800s.

Del Castillo said the conglomerate has been known as a “conservative” when it comes to investments.
History can attest that before the Zobels would invest big in a new business, they would start with a minority stake, he said.

“They study first. [They’re not] emotional businessmen. They are conservative, yet sure when it comes to investments,” he added.

Calaycay said one reason why the conglomerate had been averse from expanding its current business portfolio may have been its stable position despite the financial crisis.

Besides telecom, BPO, water services, and banking, the Ayala group is the country’s top property developer, and has interests in electronics manufacturing and automotive assembly.

“Apart from their being conservative, maybe they still see high growth potentials in their present portfolio,” Calaycay said.

“We’ll see what the group will do after the global economy normalizes,” he added.