00:00So Mitsubishi's raised their stake in the company.
00:03They've obviously had a stake before.
00:06How does this change things exactly?
00:10Well, they're looking at the opportunity set, and they're looking at our situation.
00:14They're seeing that the Ayala shares are way undervalued.
00:18They're looking at the underlying businesses, and they're saying,
00:22you know, they can replicate the kind of value creation that they've already done in Japan.
00:28If you look at Mitsubishi, they followed a value-up strategy that over the course of a few years significantly
00:36increased their share price.
00:38We have a similar situation here.
00:40If we adopt the same kind of financial discipline, focus, I think we can do some or all of what
00:50Mitsubishi accomplished with their own shares and their own valuation.
00:55What role will they play now, now that they have a bigger stake?
00:59I mean, in terms of board seats, can you tell us how much Mitsubishi can get out of this,
01:04in terms of the extent of rights that they have in future governance and business decisions with the conglomerate now?
01:12Well, we're increasing our board seats from seven to nine.
01:16Mitsubishi will have two board seats.
01:19They will send people our way.
01:25We're talking about maybe a dozen people.
01:27We'll place them in some of our key operating companies.
01:31We'll place some at the center at Ayala Corp.
01:34They'll help us out.
01:34They'll help us think through the kind of focus and discipline that is needed to really create the kind of
01:41values we're all looking for here.
01:43And at the same time, on a regular basis, probably before the board meetings, we intend to sit down with
01:49them, discuss key important points of focus,
01:53and really figure out how are we going to drive value?
01:56$700 million is a lot of money.
01:59It is a big bet on our company and our country.
02:02And we want to make sure that it pays off for them.
02:06Right.
02:07Mr. Khun Singh, if you could elaborate more on what you actually plan to do then with the $700 million,
02:12how do you plan to, let's call it, disperse that?
02:18All right.
02:19The $700 million, that's about 45 billion pesos more or less.
02:24We'll take 20 billion pesos into Ayala Corp, right?
02:29We'll issue shares for that.
02:31So that 20 billion pesos we'll use to, number one, reduce debt.
02:35Number two, acquire shares in some of our listed companies that we feel are grossly undervalued.
02:43And number three, grow some of our businesses.
02:47So that's 20 billion of the 45 billion pesos.
02:52The 20 billion of that 45 billion pesos will also be used in a tender offer.
02:58We will conduct, on behalf of Mitsubishi, a tender offer for up to 20 billion shares in the market.
03:07And at the same price.
03:09So we're talking about 650 pesos a share, both for our primary and for the tender offer.
03:19And are there going to be more joint projects between Ayala and Mitsubishi here?
03:25Yes.
03:27We've already identified the segments that we'll focus on.
03:32We'll focus on real estate.
03:33We'll focus on energy.
03:36We'll focus on fintech, financial services in general, mobility, logistics, AI, right?
03:43They match our portfolio.
03:46But more importantly, we'll not only focus on individual assets,
03:49but we'll focus on trying to create an ecosystem with these assets.
03:54Because we can certainly create value asset by asset.
03:57But what is more exciting is actually if we can create an ecosystem with the portfolio of assets that we
04:03have.
04:07Tell us more.
04:08Tell us more.
04:11Well, look, this is this $700 million investment.
04:16It's about 120 billion yen.
04:17I think it's the largest FDI that the Philippines will be getting has gotten year to date.
04:24Okay.
04:25Certainly for Ayala, it's extremely significant.
04:28You know, this is a real bet on our company and on our country.
04:35Mitsubishi, at one point, owned 20% of our stock.
04:40And over time, you know, they managed their portfolio.
04:44So their holding came down.
04:46And a few years ago, they were down to, and today, they're down to 4.7%.
04:51But they look at the situation now, right?
04:53They look at the demographics of the country.
04:56They look at the potential for good macro.
04:59They look at how Ayala is positioned.
05:01They look at the trust that people have in our company and in our businesses.
05:07They look at how we've beginning to work the assets much harder.
05:12They've looked at the rationalization moves we've made.
05:14And they've said, they've agreed with us, this is the time, right?
05:18This is the time to bet big on Ayala and on the Philippines.
05:24Mitsubishi, these are long-term players, right?
05:26This is long-term money, long, long-term money.
05:30In the same way that Ayala is a 200-year company, almost a 200-year-old company committed to the
05:37Philippines.
05:38We're talking long-term value creation here.
05:41And we'll do it in a way that, frankly, shareholders should see even in the short term, right?
05:48So we're talking long-term value creation, but they should see results in the short term, right?
05:53By paying down debt, by being rigorous with our ROE requirements and the part of our various business units, by
06:01demanding more dividends, by distributing more dividends to shareholders, and by, frankly, doing a better job of communicating what we
06:08want to do in the short term and in the medium term, I think we'll create the kind of value
06:15for shareholders in the short and medium term.
06:20And it certainly has been a concern, especially of late, Mr. Khonsing.
06:24And I think we started the interview, and you alluded to the fact that they had to look at maybe
06:29the share price and said there was value there.
06:32Can I just ask, and people have been trying to figure out why there's been so much value erosion in
06:37the markets locally there.
06:38I mean, your share price, not total return, share price itself, I think AC is down by 50% from
06:44the peak.
06:46We've been talking a lot about Ayala land, for example.
06:48That's another example of that.
06:50Why do you think that's going on?
06:51What's happening?
06:55Well, David, I think it's just a macro situation, right?
06:59In the markets, you have a stock market that, frankly, lacks liquidity.
07:06When you look at the total macro, you have an economy that's quite dependent on imported oil that imports a
07:15little bit of inflation, right?
07:18That has a couple of segments that have to make adjustments in the world of AI.
07:25So there are also macro issues there.
07:27And at the same time, Western markets have been doing quite well.
07:30So it's easy to say, look, let's not look at the Philippines for a while.
07:34But frankly, David, this is the kind of transaction that I think will force people to look at the Philippines
07:39again.
07:39Again, this market is vastly, vastly undervalued.
07:44It is vastly undervalued.
07:46Mitsubishi has the courage to recognize that and to agree with us that this is the time to do something
07:50about it.
07:53We were just speaking with Frederick Gaw, the financial secretary, just a few weeks ago, Mr. Consigne.
07:59I'd like to get your point just on that.
08:00As the economy looks to upgrade and modernize itself in this AI age, what do you think should the AI
08:06strategy be in the Philippines?
08:08Or what is the AI strategy?
08:09And how does that show up in a conglomerate like Ayala that thrives, of course, in remaining relevant throughout different
08:16times in history?
08:18Well, I think the trick here to figure out how do we take a young population, a population that is
08:27very adept with the use of mobile technology and really arm them in an AI world.
08:37And whether that can help us compensate for, say, a manufacturing sector that probably isn't as robust as it should
08:47be, an agricultural sector that is probably moving a little slower than it should.
08:55Can we use AI to compensate for that?
08:58And I think we can.
08:59I think we can.
09:00Just given the nature of Filipinos and, frankly, given the portfolio of assets that we have, and it's not only
09:08true for Ayala, it's true for a lot of other big companies in the country.
09:11I think the Philippines will be better than most at adapting to AI.
09:16Bye.
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