Ayala takes on ‘flexible’ approach to building 5-year power portfolio

BUSINESS MIRROR

MONDAY, 18 APRIL 2011 19:59 MIGUEL R. CAMUS / REPORTER

AYALA Corp. is taking a “flexible” approach to building an estimated 1,000-megawatt (MW) power portfolio in five years, given current uncertainties and possible opportunities to come from selective acquisitions, company officials said on Monday.

Following its annual stockholders’ meeting, chairman Jaime Augusto Zobel de Ayala reiterated that the plan  would allow Ayala become a “relevant player” in the power sector.

“We [will] look at [sectors] where there will be significant scale,” Zobel de Ayala told reporters in a press conference yesterday.

The head of the country’s oldest conglomerate, however, was unable to provide  details on its power plans. This, as certain aspects such as the feed-in-tariff rates which will determine the viability of renewable energy sources, has yet to be set by the government.

Patrice Clauss, who is among those spearheading Ayala’s power initiatives, said the final feed-in tariff rate would determine the final mix of renewable and traditional energy projects.  

Zobel de Ayala said the company remains interested in power assets the Philippine government plan to privatize.

The company recently signed a deal to acquire a 50-percent stake in an existing wind farm in Bangui Bay, Ilocos Norte on top of a partnership with Japanese trading powerhouse Mitsubishi Corp. to develop solar power ventures in the country.

Both projects have been folded under subsidiary Michigan Power Inc. which may be renamed “AC Energy,” Ayala chief finance officer Delfin Gonzalez Jr. said yesterday.

Michigan Power was the vehicle used by Ayala to partner with Pangilinan-led Metro Pacific Investments Corp. and Lopez-led First Gen Corp. in an unsuccessful bid to acquire the 246-MW Angat hydroelectric plant in Bulacan province last year.

Investments in power alongside bids for toll road and railway assets under the government’s Public-Private Partnership program would come on top of the P79 billion Ayala has committed this year to expand existing businesses.

Zobel de Ayala likewise said the company plans to “reinvest” in Globe Telecom, despite expectations that competition will intensify after dominant telco Philippine Long Distance Telephone Co. widened its market dominance after acquiring No. 3 player, Digital Telecommunications Philippines Inc.

“From a Globe perspective, we remain very excited on what the industry has to offer,” Zobel said.

“We are reinvesting quite heavily into the [telecom] sector to prepare our own network and Globe for what we believe will be the demand over the medium term,” he added.

Meanwhile, Ayala said HRMall, an investee company of business process outsourcing arm, Livelt Investments ltd., acquired US-based IQ BackOffice Llc.

IQ BackOffice delivers finance and accounting BPO services to mid-sized companies in the US. The combined companies are valued at approximately $15 million, Ayala said.

Ayala shareholders also approved on Monday a 20-percent stock dividend declaration on common shares and an increase in the firm’s authorized capital stock from P37 billion to P56 billion, and the creation of 40 million preferred shares.

The conglomerate earlier said full-year 2010 profit rose 37 percent to P11.2 billion as earnings from Ayala Land, Manila Water Co. Inc. and Bank of the Philippine Islands posted record earnings.

These also offset lower earnings from Globe Telecom and Integrated Microelectronics Inc. Revenues of the group rose 28.5 percent to P98.07 billion.

Ayala shares closed flat on Monday at P394.4, giving the 177-year old conglomerate a market value of P191.21 billion.  

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IN PHOTO -- REPORTING PERIOD, Ayala Corp. chairman Jaime Augusto Zobel de Ayala presides over the company’s annual stockholders’ meeting held in a Makati City hotel on Monday. --NONIE REYES