November 05, 2013

Pasay City government turns down ALI’s bid to join reclamation project

The Philippine Daily Inquirer reported on 21 October that the Pasay City government has rejected the request of Ayala Land Inc (ALI, Buy) for more time to prepare a counterproposal for a 300-hectare land reclamation project.

The original P54.5b project arose from an unsolicited proposal by SM Land Inc (which is now being merged with SM Prime Holdings Inc). The city government argued that it can change the rule midstream which would result if it grants ALI’s 60-day extension request. It also cited that one of the requirements is for a bidder to have a track record on land reclamation. ALI intends to ask the city government to reconsider its decision.

Our take: This is certainly bad news for ALI given the magnitude of the project and how this couldhave beefed up its land bank in a potential commercial business district. However, as the company has indicated, it will explore all possible options for its bid to be reconsidered even as it is now highlighting the need for transparency especially for a project of such magnitude. At any rate, the SM group appears to have the upperhand in the project. – WealthSec