Friday, March 18, 2011

Ayala Corp buys into country’s sole wind farm

Business World Online
Posted on March 18, 2011 12:07:00 AM

AYALA CORP., the country’s oldest conglomerate, has purchased a 50% interest in the country’s only wind farm as part of plans to diversify into the power business.

The acquisition of the NorthWind Power Development Corp. stake marks Ayala’s bid to build a portfolio of over 1,000 megawatts (MW) from both renewable and traditional energy sources, company president Fernando Zobel de Ayala said in a statement.
"We believe there are opportunities to make early stage investments in the renewable energy space, which may have the potential to grow over time given the need to develop alternative sources of energy," he said.
"In addition to our wind and solar initiatives, we are also developing platforms for hydroelectric power."
NorthWind owns and operates the 33-MW wind farm in Bangui Bay in Ilocos Norte, which sells electricity to the Ilocos Norte Electric Cooperative. The facility, the first commercial wind farm in Southeast Asia, operates 20 turbines.
The acquisition, accomplished through Ayala subsidiary Michigan Power Inc., cost "approximately P500 million plus ... depending on performance indicators," Emily C. de Lara, Ayala corporate communications head said in a phone interview yesterday.
Ayala said the purchase was part of an "initiative to enter the power sector and comes after the company’s recent joint venture with Mitsubishi Corp. on solar power."
Last November, Ayala infused P112.5 million into Michigan Power, which had entered into a joint venture with Diamond Generating Asia, Ltd., a subsidiary of Mitsubishi. The partners formed solar power firm PhilNewEnergy, Inc.
Analysts were mixed on the development.
For Astro C. del Castillo, managing director of brokerage firm First Grade Holdings, Inc., said Ayala’s entry into the power sector could help increase available supply and lower prices.
"You have high costs of electricity already so the challenge is to lower electricity prices," Mr. del Castillo said.
But Jose Mari B. Lacson, head of research at stock brokerage Campos, Lanuza & Co., said other local conglomerates had gotten ahead in the race to diversify into power.
"It is good because they have gone ahead with their plans but a lot of other conglomerates are already in the game," Mr. Lacson said.
San Miguel Corp., for example, now has four power plants with a combined capacity of 3,165 MW.
Shares in Ayala, which is valued by the market at P172.43 billion, closed P6.40 lower at P349 each yesterday.
The conglomerate, which was founded in 1834 and incorporated in 1968, posted saw profits rise by 37% to P11.2 billion last year on the back of strong performances by its real estate, banking, water, and car dealership businesses. --N. J. C. Morales

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