Ayala to build 1,000-MW portfolio

Manila Times.net

By Krista Angela M. Montealegre, Reporter

THE Philippines’ oldest conglomerate is gearing up for its diversification into the power and infrastructure businesses, positioning the company to ride on the strong growth momentum of the domestic economy.

Jaime Augusto Zobel de Ayala (JAZA), Ayala Corp. chairman and chief executive, said in a briefing that the conglomerate is looking at green field and existing ventures in a bid to have a portfolio of power projects with a capacity of 1,000 megawatts in the next five years.

“We have made an initial foray into solar and wind energy. We aim to balance these with investments in traditional energy to meet the country’s need for affordable power,” Fernando Zobel de Ayala, AC president and chief operating officer, said during the company’s annual stockholders’ meeting.

“Our ultimate objective is to put together a significant portfolio of power assets across technology platforms that balance environmental, social and economic impact,” he added.

Last year, AC formed a joint venture with long-time partner Mitsubishi Corp under PhilNewEnergy Inc. to develop solar power plants in select sites in the Philippines.

Early this year, the conglomerate acquired a 50-percent stake in Northwind Power Corp., which operates Southeast Asia’s first wind farm, 33- megawatt facility in Bangui, Ilocos Norte.

About “five or six conversations are going on at a specific time,” JAZA said.

Relatively new in the power business, AC may tap potential partners for these planned ventures, said Delfin Gonzales, AC chief financial officer. He said the company will change the name of its wholly owned subsidiary Michigan Power Inc. to AC Energy, reflecting the Ayala brand.

AC is also looking at bidding for projects under the government’s public-private partnership (PPP) scheme, ranging from transportation to power.

“The whole PPP side the government is emphasizing is an exciting space. The government has to face its own budget constraints and I think what is important is for the government to put in a good framework,” Gonzales said.

While its existing businesses continue to deliver for AC, its investments in power will be a strong driver of the company’s profitability because of increasing demand in the country.

“If power moves successfully, then it will shrink others in the portfolio,” JAZA said.

AC is setting aside P79 billion for its capital expenditure this year, of which P33 billion will be earmarked for the aggressive expansion of unit Ayala Land Inc. About P20 billion will be allotted for Globe Telecom Inc., P15 billion for Manila Water Co. Inc., and the balance of P11 billion for the conglomerate’s banking, electronics, automotive, business process outsourcing (BPO) and international real estate operations.

“The capex that are there are primarily for existing operating companies. If opportunities come, we will finance them accordingly,” JAZA said.

Despite the recent consolidation in the telecom industry, the AC chairman said it will not sell Globe Telecom Inc., a joint venture with Singapore Telecom, stressing that the business remains profitable.
He said the consolidation in the industry is natural and “something we learn to accept.”

“At this point in time, there is absolutely no interest. Together with Singapore Telecom, we are very interested in building Globe up in a stature where it continues to be relevant,” JAZA said.

In a disclosure, AC said HRMall, an affiliate of unit LiveIt Investments Ltd. has entered into a definitive agreement to acquire IQ BackOffice LLC of Los Angeles, California. AC did not specify the purchase price.

Upon completion of the transaction, LiveIt will own the balance of 82.5 percent of IQ BackOffice and will support the company’s strategy to accelerate its growth in its current markets in the US and Asia.

The management team of IQ BackOffice will purchase a 17.5 percent ownership interest in HRMall.

IQ BackOffice delivers high quality, software-enabled, real-time, SAS70 Type II-certified finance and accounting BPO services to mid-sized companies in the US.

AC shares rose to P393.40 on Monday from P392.20 on Friday.