* Manila Water sells 25% shares to local firm
* Deal comes as water concession deals are under review
* Investor seen as having good ties with president
* Manila Water shares surge as much as 20%
(Adds details, and fund manager and economist's comments)
By Neil Jerome Morales
MANILA, Feb 3 (Reuters) - Shares in Manila Water Co Inc
MWC.PS jumped by up to a fifth on Monday after owners the
Ayala family, who had come under attack from Philippines
President Rodrigo Duterte, sold a 25% stake to billionaire
Enrique Razon.
Duterte's threat to strip Manila Water MWC.PS and fellow
concession holder Maynilad Water of their business supplying the
Philippines capital had cost the company as much as three
quarters of its market value since last December.
Razon, who is CEO of International Container Terminal
Services Inc ICT.PS , paid 10.7 billion pesos ($210 million)
for the stake through his infrastructure firm, Prime Metroline
Holdings Inc, Manila Water said in a statement.
He becomes the second largest shareholder after Ayala Corp
AC.PS , run by one of the country's oldest business families,
which holds 38.6%.
Ayala has faced repeated attacks from the popular president.
"If Mr. Razon is going to be the middle man for both
parties, and if the relationship of Razon with government is
good, it is a good signal," said Alan Joseph Amador, fund
manager at The Insular Life Assurance Co in Manila.
Although Razon has no clear ties to Duterte, the Ayala
dynasty that has prospered since Spanish colonial times in the
19th century has been a target for the president over its
telecoms and property businesses as well as the water company.
Manila Water's shares were the Philippines' most actively
traded on Monday. They jumped as much as 20% to a seven-week
high, before paring gains to 4.9% at market close, while the
broader index .PSI fell 0.89%. "We are confident that our collective experience, technical
capabilities, and corporate synergies will be of great benefit
to Manila Water, the people it serves, and its other
stakeholders," Razon said in a statement.
CASINO
Razon, ranked by Forbes as the fourth richest Filipino with
a net worth of $5.1 billion, has ventured into power
distribution and bulk water supply since Duterte took office in
2016.
He is also chairman of Bloomberry Resorts Corp BLOOM.PS ,
which owns and operates a $1.2 billion megacasino.
Razon's deal represents a 6.9% premium to Manila Water's
closing price of 12.16 pesos on Thursday.
Duterte had rebuked Manila Water and Maynilad Water over the
terms of their concessions with the government which expire in
2022 but are subject to a 15-year extension under review,
something the president has labelled "onerous and
disadvantageous" to the public.
As well as threatening to take away concessions to supply a
combined 16 million customers, Duterte said he was ready to sue
their billionaire owners for economic sabotage.
The president's office made no immediate comment on the deal
with Razon.
After Duterte's attack, Manila Water dropped a request for
higher water rates and said it would forego a 7.4 billion peso
arbitration award.
The reviews of the water company concessions had added to
uncertainty for foreign investors, Nomura economist Euben
Paracuelles said.
"These are very sector-specific issues but the risk is that
these questions show that sentiment overall could start to be
affected," he said.
(Additioanl reporting by Karen Lema; Editing by Matthew
Tostevin and Jason Neely)