Month: October 2018

AC Infrastructure and the Global Fashion Group Team Up to Transform Logistics

E-commerce and digital payment platforms are changing the way people purchase goods. These ecosystems give small, medium, and large-scale businesses a space to innovate services for new markets and grow at a faster pace. As the digital economy expands, traditional logistics infrastructure and systems is also undergoing a similar digital transformation to meet the needs of this growing marketplace.
Ayala Corporation, through its wholly-owned subsidiary AC Infrastructure Holdings Corporation (AC Infra), has partnered with Brillant 1257 GmbH & Co. Vierte Verwaltungs Kg, a subsidiary of the Global Fashion Group, the leading online fashion destination for growth markets, to form a technology-driven end-to-end fulfillment solutions company. The joint venture company, Entrego Fulfillment Solutions Inc. (Entrego), is 60% owned by AC Infra and 40% owned by Brillant.
Entrego draws from its strong competence and track record in e-commerce fulfillment solutions, having started in 2013 as ZALORA Philippine’s logistics division. The company takes its name from the Spanish word entregar, which means “to deliver”. “Entrego” literally translates to “he delivered”, which aptly captures the company’s ultimate objective of fulfilling its commitment to its clients.
Entrego intends to build on its expertise in e-commerce logistics and fulfillment solutions and offers an integrated suite of fulfillment services including management of parcel, document and bulky deliveries for B2B and B2C customers.
AC Infra has so far committed 580 Million pesos to grow Entrego into a significant technology-driven fulfilment solutions provider in the Philippines.
Ayala Corporation Chairman and CEO Jaime Augusto Zobel de Ayala sees benefits for the Ayala group with Entrego. He shares “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.”
He adds that Ayala’s entry into the fulfillment space “unlocks opportunities for its real estate, banking, telecom, health, automotive, and industrial manufacturing businesses and paves the way for new business models.”
Emerging opportunities for Ayala, as well as the growth of many SMEs, are anchored on having a highly-efficient, reliable, and inexpensive platform to move goods across the archipelago. Entrego is well positioned to meet these expectations with its 45 hubs as of October 2018 covering over 1,500 cities and municipalities all over the Philippines. Since starting operations, Entrego is averaging a 99% on-time delivery rate nationwide, and even
reaches 100% on-time delivery in certain areas.
Patrick Schmidt, co-CEO of Global Fashion Group shared, “We are proud of how the synergy between Ayala and ZALORA Philippines has created a new retail environment that benefits the Filipino consumer and with Entrego, we hope to deliver a positive impact on the country’s fulfilment sector by using technology and data as the main driver. This will unlock huge opportunities for e-commerce and brands in the Philippines.”

Technology-Driven Logistics for a Digital Economy

“We are applying technology to transform the logistics ecosystem. Our intent is to innovate and organize services to achieve better operating and cost efficiencies for the various customers we have, whether large, medium, or small-scale companies,” shared AC Infra CEO and Chairman of the Board of Entrego Rene D. Almendras.
Entrego helps businesses manage their B2C and B2B fulfillment needs by providing customized end-to-end solutions. Its technology backbone enables real-time tracking of shipments, providing clients visibility and peace of mind that goods get to their destination. Entrego’s data-driven approach allows it to provide value-added services and detailed performance analytics, providing business managers valuable decision-making tools.
“With our technology-driven fulfillment solutions, our mission is to enable businesses to grow and allow them to focus on their core competencies by taking on the burden of logistics: that of getting goods from origin to destination economically and efficiently, with more visibility in the supply chain, and better customer experience,” said Entrego’s President Constantin Robertz.
To further support its investment in Entrego, AC Infrastructure will also be building a state-of-the-art e-commerce center to support back office operations. This facility can support the fulfillment of more than 100,000 orders daily when fully operational by the second half of 2019.

Empowering Businesses is Our Fulfillment

Entrego’s technology aims to level the playing field for small, medium, and large-scale enterprises across a broad spectrum of industries and sectors.
Through its ecosystem of relationships with different players in the logistics industry and driven by a dynamic team, Entrego puts itself in a unique position to scale rapidly, move with agility, and respond effectively to the evolving needs of its clients.
From you to there, Entrego delivers.

(In photo, L-R)

Rene D. Almendras, AC Infra CEO and Chairman of the Board of Entrego
Constantin Robertz, President of Entrego

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AC Infrastructure Holdings Corp. (AC Infra) is the Ayala group’s wholly owned subsidiary that pursues projects to support the growing infrastructure needs of the public and private sectors. AC Infra meets the country’s urgent needs for efficient, reliable, safe, and sustainable modes of mass transportation, transport services, and fulfilment solutions services.

For further inquiries, contact:
Ken Lerona
Head for Marketing and CSR, Entrego
ken.lerona@entrego.com.ph
Joseph Anthony M. Quesada
Corp. Comm. and Sustainability Manager, AC Infra
quesada.jam@acinfra.com.ph
May Florentino
Senior Manager, Corporate Communications
Ayala Corporation
florentino.mpp@ayala.com.ph

JAIME AUGUSTO ZOBEL DE AYALA
GRI SUSTAINABILITY SUMMIT
PANEL: INDUSTRY PERSPECTIVE: PHILIPPINE BUSINESS PAVING THE PATH TO A SUSTAINABLE PHILIPPINES
OPENING STATEMENT
Monday, 08 October 2018 | Conrad Hotel

Good morning to everyone.

I congratulate GRI for organizing this summit and bringing together members of the private sector to push the topic of sustainability to the spotlight.
Let me start by thanking Tessie and Hans Sy of the SM Group for organizing this gathering. Sunny Verghese of Olam for being an extra ordinary entrepreneur and global citizen. His eloquent views on sustainability and it’s imperative for us in this day and age always inspire me. Also, a thank you to Bobby de Ocampo, Tim Mohen, and the Australian Embassy for their support of this conference.
Today, let me touch on the Ayala group’s sustainability journey—the thinking behind our sustainability philosophy, the tangible ways we are progressing to support this thinking, and some of the challenges that we face along the way.
Ultimately, all of us have a responsibility to address and contribute to addressing global issues that move beyond our corporate and national interests.
Let me start with the thinking behind our sustainability philosophy. In recent years, we have seen how the significant progress in our economy has yet to materialize in the lives of a majority of Filipinos. We have always believed that in a developing economy like ours, businesses play an indispensable role in addressing some of the most pressing development challenges. This responsibility does not only lie with governments.
To remain relevant, to continue building trust with communities, businesses must contribute to society as a whole, and ensure the progressive development of the markets they serve. In our case, Ayala has a presence in diverse industries that touch on human lives—housing, water, telecommunications, financial services, transport, healthcare, and education. By integrating societal needs into our corporate strategies, we believe we can play a role in alleviating some of the development challenges our country faces today.
It has become clear to us that businesses cannot operate in a vacuum, linked only to the community by the investments they make and the profits they generate. The role of private enterprise goes beyond that.
In recent years, broader communities and stakeholders have increasingly demanded more from private enterprises as well. We need only look at the pockets of social tension that have arisen around the world in protest of the current status quo, characterized by inequity, lack of opportunity, and the failure of institutions such as governments and the capitalist system to foster a more equitable world.

This thinking has, over time, led us to broaden our products and services to bring about greater economic and social inclusivity. Our group has identified opportunities for disruption in sectors that are undergoing massive challenges in affordability, quality, and accessibility.
On a personal note, these ideas began to percolate in my mind after I left business school in the 1980s. While I continue to place great value on the education I received, at the time, it also occurred to me that a significant component of my studies was not necessarily relevant to the needs of the Philippines. I would later meet a number of thought leaders who would develop these ideas cohesively, including Harvard professor Kash Rangan, who spoke on business at the base of the pyramid and, Michael Porter, another Harvard professor who developed the thesis on “creating shared value” and over time formed a global following around this thinking, including ourselves at the Ayala group.
Michael Porter defines “shared value” as policies and operating practices that enhance a company’s competitiveness, while advancing the economic and social conditions in the community where it operates.
Our group has embraced this philosophy and are increasingly aligning our profit goals with the needs of the communities we interact with, which is the second point I want to make.
Our real estate, banking, telecommunications, and water businesses continue to expand their offerings to reach more Filipinos, in support of our sustainability agenda.
More recently, we entered sectors and employed innovative business models that allow us to help fill gaps and meet the real needs of Filipinos: retail pharmacies and community-based, primary care clinics to fill healthcare gaps; affordable and quality education to enhance employability; and power, infrastructure, and industrial technologies to help sustain our country’s economic growth.
Let me cite a few tangible examples from the Ayala group, starting with our water unit. Manila Water has a flagship program called Tubig Para sa Barangay that delivers affordable potable water specifically to low-income communities, including informal settlers. Many people said the model would not work, as informal communities would not pay for piped-in water. However, Manila Water developed a new business model that included flexible financing options, a socialized tariff scheme, and shared accountability among neighbors. We are happy to report that Manila Water has succeeded in getting more than 1.6 million people into the program with 100 percent collection efficiency in these communities. Participants in the program now enjoy savings on their water costs, a reduction in water-borne diseases in their areas, and an improvement in the overall sanitation conditions in their communities.
The second example I want to make is in our healthcare unit. AC Health developed an innovative chain of community-based primary care clinics called FamilyDOC. This platform offers the services of an outpatient doctor’s clinic, a diagnostic facility, and a pharmacy in a single space that minimizes costs for families without jeopardizing the quality of healthcare received. Locating in high-density areas allows FamilyDOC to maximize foot traffic and build a relationship with the community. In addition, its prepaid and reloadable “health cards” and membership programs allow patients in these low-income communities to maximize the healthcare services available.

As a final example, we have entered the education space through the Affordable Private Education Centers or APEC Schools, a chain of secondary schools that provide quality and affordable education with annual school fees within reach of middle to lower income households. APEC strives to enhance the employability of students through programs co-designed with partners in the private sector, and makes use of technology-enabled classrooms that help to build skills sought by employers. It does this by balancing costs, without sacrificing the quality of education that students receive.
However, from our experience in the Ayala group, developing businesses for low-income communities presents a few unique challenges, which is the third and final point I want to touch on. This segment has inherent characteristics that tend to raise the costs of doing business and, while many of these are common to any business, they are more acute as the incomes of the target segments fall.
As we evolved and adjusted our own business models to be far more inclusive in meeting the needs of a much broader consumer segment, we have identified three key challenges to operating within the base of the pyramid.
First is the operational challenge. There are implications of affordability and access during the initial entry into low-income consumer markets. For example, lower disposable incomes limit the amount of a product that can be purchased at any one time. This is why “parceling” or purchase-as-needed small amounts have become popular in emerging markets.
Second is the more fundamental culture challenge as corporate decision-makers do not typically come from the base of the pyramid, making them a step removed from the realities on the ground.
Finally, there lies the challenge of improving the overall framework for doing business, with uncertainties in regulation and enforcement of policies increasing the complexity of developing inclusive businesses.
From these experiences, the single most important take away from us is the need for businesses to be open to experimentation: to looking at business models from a new and innovative perspective.
Through innovative and creative business models, we have sought to achieve a balance between our financial aspirations and our broader sustainability and nation-building goals. As our group constantly strives to seek ways to integrate our sustainability philosophy into the core of our businesses, the United Nations Sustainable Development Goals provided much-needed structure and spurred a natural transition to anchor our own goals to this global framework.
We believe that the SDGs capture succinctly the responsibility that we all have for each other—our collective goals to end poverty, protect the planet, and ensure prosperity for all. For businesses, they outline key metrics that we can use to measure and drive the positive impact we have on society.

Furthermore, the SDGs served as essential guide in our adoption of the integrated report framework that captures our company’s financial results along with our environmental, social, and governance or ESG performance. We believe that transitioning to this annual reporting framework in addition to our adherence to GRI standards helps our stakeholders better understand our shared value creation process and its overall impact on society and our country.
While we believe that this is a core value at the heart of corporate culture that guides all our employees, we continue to look for ways to ensure that sustainability is fully embedded into our business strategy today and in the future. As a group, we are undergoing the process of developing concrete sustainability targets to monitor more accurately our contributions to the SDGs.
In closing, sustainability is increasingly gaining prominence at the heart of our strategy, as we strive to put the resources, knowledge, expertise, and talent we have towards meeting the real needs of Filipinos. Our determination to create shared value is what I hope will define the company today and in the coming years. This is not a function of altruism, but rather a strategic imperative. Businesses cannot survive in communities rife with inequity and in a degraded environment.
Ignoring the challenges faced by the world today threatens our ability to create long-term value and jeopardizes enterprises, markets, and entire societies.
At Ayala, we will continue to do our part to work better and innovate further to reach more Filipinos, improve lives, and contribute to addressing global issues that now extend well beyond our corporate and national boundaries.

MAKATI, Philippines – October 1, 2018 House of Investments Inc. (“HI”), HI’s education holding company iPeople, inc. (“iPeople”), Ayala Corporation (“AC”) and AC’s wholly-owned education subsidiary AC Education, Inc. (“AC Education”) signed the definitive agreements for the merger of AC Education with iPeople. The merger shall be subject to the approval of the stockholders of AC Education and iPeople, and securing the necessary regulatory approvals. Post-merger, listed iPeople shall be the surviving entity, with HI and AC controlling 51.3% and 33.5%, respectively. The transaction values the combined entity at approximately Php15.5 billion.
HI and AC will share governance and management of iPeople which, as a result of this strategic partnership, will become one of the leading education groups in the country, with almost 60,000 students.
The merger will bring together the 7 educational institutions of iPeople and AC Education, which together will offer quality education to students across all income segments, with campuses in Metro Manila, Calabarzon, the Bicol Region, and Mindanao. The merger will include iPeople and its significant subsidiary, Malayan Education System, Inc. (Operating under the name of Mapua University), one of the country’s leading engineering and technical universities, a world ranked QS-3 star university and the school with the most CHED Centers of Excellence in Engineering, and its subsidiaries, Malayan Colleges Laguna, the best board exam performing private higher education institution in Calabarzon, Malayan Colleges Mindanao in Davao, and Malayan Science High School in Manila. It will also include AC Education and its subsidiaries, the University of Nueva Caceres, one of the oldest and largest universities in Bicol, National Teachers College, the country’s pioneer private teachers’ training tertiary education institution, and APEC Schools, the largest chain of private stand-alone high schools in the country.
“We are looking forward to the merger of AC Education and iPeople. Mapua’s reputation as a leading private engineering and technical university in the country, together with AC Education’s tested ability to provide affordable quality education, leading to the employability of its graduates, would enable the Yuchengco-owned House of Investments and Ayala Corporation to jointly contribute, in a bigger scale, to the Philippines and all sectors of society. Together, our schools will not only aim at educating our youth but also at preparing our graduates to become major players in sustainable businesses driven by adaptive technology,” said Mrs. Helen Y. Dee, Chairperson of House of Investments.
“We are looking forward to working closely with the Yuchengcos’ House of Investments in helping to build the nation through education. We believe that combining our resources and capabilities will allow us to, together, enable many more Filipinos to achieve their dreams of a better life for themselves, their families and communities, by arming them with the values, critical thinking, global mindset and 21st century skills that are necessary to succeed in this rapidly changing world,” said Jaime Augusto Zobel de Ayala, Chairman and CEO of Ayala Corporation.
BPI Capital Corporation acted as the exclusive financial adviser to AC Education while RCBC Capital Corporation acted as the exclusive financial adviser to iPeople.

Photo shows (L-R):

Gema O. Cheng
Executive Vice President – Chief Operating Officer, Chief Finance Officer & Treasurer
House of Investments, Inc.
Executive Vice President – Chief Finance Officer & Treasurer
iPeople, inc.     

Alfredo Ayala

President and CEO

AC Education

Renato C. Valencia
Chairman
iPeople, inc.    

Fernando Zobel de Ayala

President and COO

Ayala Corporation

Helen Y. Dee

Chairman, RCBC

Jaime Augusto Zobel de Ayala

Chairman and CEO

Ayala Corporation

Medel T. Nera
President & Chief Operating Officer
House of Investments, Inc.

TG Limcaoco

CFO

Ayala Corporation

Reynaldo B. Vea PhD
President & Chief Executive Officer
iPeople, inc.    

Atty. Solomon Hermosura

Chief Legal Officer

Ayala Corporation

Contact Information:

House of Investments, Inc.
Investor Relations Office
Ring F. Joven
Email: rfjoven@hoi.com.ph

iPeople, inc.
Investor Relations Office
Ring F. Joven
Email: rfjoven@hoi.com.ph

Ayala Corporation
Corporate Communications
Yla Patricia G. Alcantara
Email: alcantara.ypg@ayala.com.ph