TWO CHINESE companies are pouring $332 million into the Makati City Subway System project, according to Philippine Infradev Holdings, Inc.

In a disclosure to the stock exchange, Philippine Infradev said it signed an investment agreement with Hui Gao Investments Development Limited in Hong Kong on Oct. 28.

Under the investment deal, the Chinese firm will subscribe to common shares representing 34% of Philippine Infradev’s adjusted shares capital for $102 million. In turn, Philippine Infradev subscribed to 51 million common shares of subsidiary Makati City Subway, Inc. (MCSI), which will undertake the construction, operation and management of the subway, for $102 million.

Hui Gao will also provide “directly or indirectly” a $200 million credit facility to MCSI. It also committed to providing 51% of the funding required for the subway project.

“Proceeds from the investment shall be used for the construction and completion of the Makati City Subway System,” Philippine Infradev said, adding the closing of the investment within 60 days.

The company, led by businessman Antonio L. Tiu, said MCSI also signed a subscription agreement with Shanghai Mintu Investments, Ltd., wherein the latter subscribed to 15 million common shares for $30 million.

“(Philippine Infradev), Shanghai Mintu and Hui Gao issued letters of guarantee wherein they guaranteed to advance or fund the cost required for the completion of the Makati Subway System based on the final cost of EPC (engineering, procurement and construction) works determined by the contractor engaged by MCSI,” the listed firm said.

In a separate statement, Makati City Mayor Mar-Len Abigail Binay-Campos said together with the city’s land contribution and initial investment, the Makati subway project now has funds of around $500 million.

“The Makati Subway project is definitely gaining momentum, and we are confident that our lead partner Philippine Infradev Holdings will be able to sustain the pace and finish the project on schedule… We are also grateful to our new partners from the Chinese business community for showing their trust in the viability of the subway project through their investments. With their vote of confidence, we anticipate more investors coming in to share our vision for the city,” Ms. Binay-Campos was quoted as saying in the statement.

Hui Gao was described as an affiliate of the Hong Kong-listed developer Redco Properties Group, while Shanghai MinTu is an investment holding group focusing on infrastructure, mass transportation, and financial services.

Philippine Infradev has already tapped several Chinese firms for the $3.5-billion Makati City subway project. These firms are Greenland Holdings Group; Jiangsu Provincial Construction Group Co. Ltd., Holdings Ltd. and China Harbour Engineering Company Ltd.

The 10-kilometer intracity railway system will have 10 stations. Philippine Infradev will operate the subway for 50 years. Its completion is expected in 2025, by which time the train will be able to accommodate 700,000 passengers every day. — Arjay L. Balinbin

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