MPIC Value Creation Framework

GRI 102-2

MPIC is a holding company that creates value through investments in critical infrastructure and essential services. We acquire companies and form strategic partnerships around infrastructure that creates long-term value to our stakeholders and contributes to the Philippines’ inclusive development and economic advancement. We manage, transform, and grow these diverse companies to achieve our ultimate goal of contributing to overall national progress and uplifting lives.

We raise various forms of capital and leverage our brand as the leading infrastructure firm in the Philippines to originate new projects and upgrade existing ones. We continuously fund and find ways to improve operational efficiency and service delivery, leading to increased customer coverage and expanded access to vital services.

All of our investments are highly regulated and operate within a framework of national laws and regulations. We work closely and partner with the government to uphold our commitments under various concession and franchise agreements. We strive to ensure that any adverse impact from our operations is within prescribed lawful limits and standards, if not altogether eliminated.

Year after year, our companies increasingly make a difference in the quality of life of millions of Filipinos. We drive socio-economic growth through Meralco’s effective power distribution and generation, MPTC’s world-class mobility infrastructure, Maynilad’s reliable water supply and sanitation services, LRMC’s efficient and affordable rail-based mobility system, and MPHHI’s delivery of quality healthcare services. We generate such value through a range of key business activities that aid us in sustainably managing our portfolio.

Acquisition and Development of New Businesses
MPIC is highly selective and strategic in all of its investment decisions. Every investment is subjected to extensive due diligence, which is conducted on a phased basis to minimize the costs of evaluating opportunities that end up not being pursued.

We recognize that our businesses are more likely to create long-term value if our portfolio is sustainable with respect to a broad range of economic, environmental, social, and governance factors. We consider all these factors when selecting and deciding on our investments. We conduct environmental and social scanning to determine how our involvement in a particular initiative leads to the country’s sustainable development while balancing the interests of all stakeholders. We also consider what regulators in the Philippines and other markets consider as affordable by the public.

Our due diligence process is rigorous as it is fundamental to the growth and development of our business. We subject every investment to a thorough and careful review of financial, operational, regulatory, social, and environmental matters. We evaluate each risk, including dispute resolution mechanisms, so we can adopt appropriate measures to manage these risks and calibrate their impact on investment returns. In addition, we manage risks when entering into new investments to guarantee the financial stability of the holding company, and within each of our operating companies.

The Philippines remains our primary geographic focus although we have assets in Indonesia, and Vietnam. We mitigate foreign investment risk by partnering with local firms that have high trust ratings and influence in the countries where they operate, and by engaging strong and reputable local advisers.

Transition and Asset Management
MPIC sets policies and procedures that guarantee the integrity and transparency of related party transactions in the event of an acquisition or when it ventures into a new investment. During this transition period, these policies and procedures are carried out to the letter between and among the corporations and their parent company, joint ventures, subsidiaries, associates, affiliates, and major stockholders, officers, and directors.

We monitor and evaluate all investments to fully comply with applicable laws and regulations, including specific terms of relevant approvals and agreements governing environmental impact, social impact, and community engagements. Beyond compliance and in addition to upgrading our assets through capital investments, we get our companies to implement operational improvements that manage and protect their assets, including the welfare and security of human capital and the public.

Our investments involve a partnership approach to varying degrees. We work with partners that co-invest adequate inputs and resources to mitigate risks that may arise from venturing into new business areas. We finance new investments through a debt-equity combination that references the cash flow strength of the target business and the overall financial situation of MPIC.

Value Realization and Divestments
At all times, MPIC is guided by how it creates and adds value to the customers and communities that it serves when evaluating an investment opportunity and prospect. We always find ways and means by which we can improve the quality of our infrastructure assets, enhance their efficiency and effectivity, extend access or coverage to more people, and improve cooperation and relationship with regulators to achieve shared goals. Assets and businesses normally mature at some point. This is the typical trajectory or life cycle of most investments. We take a prudent approach to crystallize assets when such threshold is reached, but always bearing in mind the best interests of our shareholders and the public.

The Key Business Activities, Value Created, and Delivered by our operating companies are discussed in detail in the succeeding sections.