Tâm Đức hospital, 7th district, Ho Chi Minh City. (Photo credit: Wikipedia)Reflecting its optimism on Vietnam’s economic outlook, conglomerate Ayala Corp. is investing in two infrastructure companies based in Ho Chi Minh, the largest city in Vietnam.
In a disclosure to the Philippine Stock Exchange (PSE), Ayala said it is acquiring a 10-percent stake in leading infrastructure firm Ho Chi Minh City Infrastructure Investment Joint Stock Co. (CII) as well as a 49-percent stake in Kenh Dong Water Supply Joint Stock Co. through subsidiary Manila Water Corp.
The move is in line with the group’s strategy to shore up its presence in Vietnam, which is expected to emerge as a major manufacturing hub in the ASEAN region due to improving business climate, increased trade and investment cooperation and low labor cost.
CII holds business interests in water treatment plants and toll roads serving the city and surrounding areas.
It also holds a stake in Thu Duc Water BOO Corp., a water treatment company which is now 49-percent-owned by Manila Water Corp.
In addition to water infrastructure, CII holds toll road concession agreements such as the 15.7-kilometer expansion of the existing Ha Noi Highway which connects the northeastern part of Ho Chi Minh City to Bien Hoa, an industrial center located in the southern part of Vietnam.
CII is looking to invest further in new water infrastructure initiatives and is eyeing expansion into other types of infrastructure projects such as public transportation terminals.
Kenh Dong, on the other hand, has a water treatment plant, with a projected capacity of 200 million liters a day, which is expected to start commercial operations by the second half of the year.
The facility is expected to benefit the suburban districts of District 12, Tan Phu and Binh Tan, where water coverage is very low, averaging at about 50 percent of the population.
At present, Kenh Dong has a bulk water supply contract with Saigon Water Corp. for a guaranteed volume of 150 million liters per day.
Saigon is the state-owned enterprise managing the water supply system in Ho Chi Minh City.
Ayala president and Manila Water chairman Fernando Zobel de Ayala said: “This investment primarily supports and complements the expansion of Manila Water as it gradually builds its presence in Vietnam. At the same time, this also provides strategic access to other related infrastructure opportunities which may be of value to the group.”
“We recognize Vietnam is a high growth area in the region and there is strong demand for infrastructure investments. This may potentially present opportunities for the Ayala group to establish presence across several sectors,” Zobel de Ayala said.
The Ayala Group is making a strong push in the infrastructure space to diversify revenue streams to spur faster growth.
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