AYALA CORP. (AC)’s infrastructure unit is investing more than a billion pesos to grow its logistics business, as the conglomerate capitalizes on opportunities in the growing e-commerce industry.
AC Infrastructure Holdings, Inc. formally launched on Monday Entrego Fulfillment Solutions, Inc., its 60-40 joint venture company with Brillant 1257 GmbH & Co. Vierte Verwaltungs Kg (Brillant), a subsidiary of Zalora operator Global Fashion Group (GFG).
“Total investment is over a billion until next year. We see a lot of opportunities, and a lot more space that can be entered into,” AC Infra President and Chief Executive Officer Jose Rene D. Almendras said in a press briefing in Makati on Monday.
Entrego started out as the logistics division of Zalora Philippines in 2013, before being transformed into a joint venture firm between GFG and AC Infra. The company offers integrated fulfilment solutions such as management of parcel, documents, and bulk deliveries for business-to-business (B2B) and business-to-consumer (B2C) clients.
Mr. Almendras said the investment will cover Entrego’s 12,000-square meter facility being built in southern Metro Manila. The facility will have the capacity to process more than 100,000 packages a day, and is expected to be completed by the fourth quarter of 2019.
“We are opening that next year, it will be our first automated sortation center, a sorting facility. The benefit is you can dock a whole truck of parcels, then it gets sorted to different parts of the country,” Entrego Chief Executive Officer Constantin Robertz said during the press conference.
This will boost the Entrego’s current capacity, which Mr. Robertz noted is “in the five-digits, tens of thousands.”
Mr. Robertz said the company has 45 distribution hubs across the country, ensuring 90% nationwide coverage for deliveries. It targets to have a total of 60 distribution hubs by next year to further expand its coverage.
Entrego’s customers include Zalora, with a share of less than 30%, and the Ayala Group, cornering less than 50%.
In September 2017, the Ayala group also acquired a 49% stake in Zalora Philippines operator BF Jade E-Services, Inc.
AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala said the investment in Entrego will benefit their businesses in real estate, banking, telecom, health, automotive, and industrial manufacturing.
“Our business units overlap on several fronts and managing their supply chain and their fulfillment services needs to its customers is one such front where we see Entrego adding value,” Mr. Zobel said in a statement.
Mr. Almendras said they expect the business to profitable “soon.”
At the same time, AC Infra targets to unveil another similar partnership within the year.
“We’re targeting to have a launch for that one before the end of the year… Along the lines of what we have today,” Mr. Almendras said. He added that they are teaming up with a Nasdaq-listed company for this venture.
With its logistics business, AC Infra hopes to take advantage of the growth in the local e-commerce sector which is estimated to generate revenues of P185 billion and have 46.1 million users by 2020.
“E-commerce’s 10-year CAGR (compounded annual growth rate) is 40%. Imagine the volume there,” Mr. Almendras said.
Shares in AC jumped 2.03% or P18.50 to close at P928.50 each at the stock exchange on Monday. — Arra B. Francia