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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

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The Ayala Way

Using money to make money

LARGE COMPANIES ARE USUALLY not nimble. But tell that to Ayala Corp.'s management, and the response is likely to be derisive. The company may be one of the biggest conglomerates in the Philippines (1995 sales: $947 million), but it is no lumbering giant. In fact, over the years, agility and the ability to use capital productively have been its corporate hallmarks.

In 1988, it spun off its real estate division, Ayala Land, and took it public three years later. From the nearly $68 million in capital Ayala Land netted, it bought a big chunk of the 1,300-hectare Canlubang sugar plantation 45 km south of Manila and began laying the groundwork for its entry into middle-class housing, as opposed to the high-end residential projects it had concentrated on up to then. Says president Francisco Licuanan: "The Canlubang development will give us growth for the next 10 to 15 years."

Not that Ayala Land needs it. It is already the country's biggest public company in terms of market capitalization: $6.1 billion. Its profits have exploded from $43 million in 1992, the first full year after the initial public offering, to $125 million in just the first nine months of this year. One hundred dollars invested in Ayala Land shares when it went public is worth $430 today. "The IPO added luster to the company's size," says Licuanan. Ayala Corp. and Ayala Land together dominate the Manila Composite Index -- the two of them represent 16% of it. Until a recent correction, they led the index in a surge that had lasted most of the year.

Parent Ayala Corp. took the nearly $31 million it gained from the Ayala Land IPO to boost stakes in the Bank of the Philippine Islands and the telecommunications company Globe Telecom. It also made fresh investments in three very different kinds of businesses -- Purefoods Corp., Integrated Microelectronics Inc., and a joint venture to build cars with Honda, Mitsubishi and Rizal Commercial Banking Corp.

Mass transport is the next target. Ayala Corp. built Manila's prime residential and business district of Makati, and it developed a 659-hectare upscale residential village called Ayala Alabang. It plans to link these two and Canlubang by operating the government's national railway system from north of Manila to Batangas province in the south. "Railroads are very important for the future," says Licuanan. "We can modernize the system in two to three years." It just might run as quickly and smoothly as Ayala Corp. does.

-- By Tim Healy and Antonio Lopez/Manila

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