Infrastructure

Connecting communities by modernising Manila’s rail system

Macquarie Capital acted as the sole financial adviser to Metro Pacific Investments Corporation (MPIC) on the sale of a 34.9 per cent stake in its rail platform, Metro Pacific Light Rail Corporation (MPLRC), to Sumitomo Corporation (Sumitomo) for an equity value of approximately PHP 3 billion ($A90 million).

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Sector	Infrastructure
Sub-sector	Transport
Location	Philippines

Opportunity

Building on the success of winning the public-private partnership bid for the LRT1 concession in 2014, MPIC, Philippines’ largest listed infrastructure company, has once again partnered with Macquarie Capital as they sought a strong strategic partner to elevate their railway business in the heart of Manila.

Approach

Macquarie Capital acted as sole financial adviser to MPIC on the sale of a 34.9 per cent stake in its rail subsidiary MPLRC to one of Japan’s largest trading companies, Sumitomo, for an equity value of approximately PHP 3 billion ($A90 million).

MPLRC holds a 55 per cent stake in Light Rail Manila Corporation (LRMC). LRMC has a 32-year concession to operate, maintain and extend the 20.7 km LRT1, a vital light rail infrastructure asset that connects the Northern and the Southern parts of Metro Manila.

Macquarie Capital ran a highly competitive auction process which attracted several global rail strategic investors. Macquarie Capital positioned the opportunity as a rare significant minority stake in a proven operating crucial transportation asset, with expansion, in a fast-growing economy.

Macquarie Capital provided strategic direction especially during crucial times marked by a volcano eruption in the Philippines in early 2020 that affected rail operations, and the impact of COVID-19. The transaction demonstrated seamless collaboration between the Manila and Tokyo offices of Macquarie Capital in advisory execution, and showcased our deep knowledge of the rail infrastructure business.

Outcome

Having decades of involvement in rail EPC (Engineering, Procurement and Construction) and O&M (Operations and Maintenance), this is Sumitomo’s first equity investment into a rail operation business. Sumitomo will now support Manila’s public transit infrastructure and connect communities even closer through the Cavite extension, a 11.7-km extension of LRT1, and their other planned rail projects in the Philippines.

LRT1 is one of South East Asia’s first rail assets and the only privately-operated rail system in the Philippines. It currently has 20 stations and an average daily ridership of over 400,000 people. The Cavite Extension that will extend the rail system to 32.4 kms with an additional eight stations is expected to be operational in 2023.

With their global rail expertise, Sumitomo will significantly contribute to the efficiency of LRMC’s current operations, and will assist in further development of non-rail business opportunities.

"Advising MPIC was a rewarding experience for Macquarie Capital especially considering the challenging conditions posed by the COVID19 pandemic. The successful outcome is testament to Macquarie Capital’s leading expertise in infrastructure coupled with seamless global collaboration.

Macquarie Capital has a strong relationship with Sumitomo Corporation. We are delighted to see them joining MPIC, our longstanding partner, in accelerating Philippines’ development of public transportation infrastructure."

Justin Ocampo – Head of Macquarie Capital, Philippines

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Macquarie Capital

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