Ayala (A): Going beyond the sum

Jaime Augusto Zobel de Ayala and his brother Fernando, 7th generation leaders of the family-controlled Ayala Corporation, had just finished discussing a new business proposal with their father, Don Jaime, that could potentially be the company’s first public utilities services pitch. Jaime Augusto and Fernando had recently been elected CEO and COO respectively of the Ayala conglomerate. The company had over 160 years of history that was closely linked to the story of the Philippines, and both brothers were keen to continue building on their ancestors’ vision of being a “catalyst for growth and entrepreneurial development” in the country and help close the huge social gaps while driving the corporation’s growth. They were full of optimism and driven to take their businesses to the next level while shaping and leaving their mark on the organization. An opportunity to do so arose when the government called for bids to improve Metro Manila’s water distribution under a public-private partnership format. Metro Manila had one of Asia’s oldest and most inefficient water and sewage systems. Water distribution was catastrophic: around 75% of households did not have access to a 24-hour water service and many people had no access to clean water at all. Leakages and pilfering exasperated the problem. Fernando and Jaime Augusto were excited and wanted to find a new way of creating economic value, but when they discussed the venture proposal with their father, it soon became clear that not everybody shared their vision and optimism. Could Ayala turn the Manila Water business around and make it profitable? Could it help solve the water issues and improve the lives of some lower income groups? The company had always avoided becoming involved in politics and the public sector. Was the organization ready for a public-private partnership? What were the risks and advantages?