The Philippines’ oldest conglomerate, Ayala Corporation, is tapping the capital market to refinance its maturing obligations as it sets sight on opportunities in Indonesia, a BusinessWorld report said. The Ayala board approved the shelf registration of P20 billion bonds to cover its funding requirements until 2019, the company said in a disclosure to the stock exchange.
Of the total, about P10 billion-15 billion may be issued in the third quarter that will be used to refinance debt maturing in April next year, Ayala chief finance officer Jose Teodoro K. Limcaoco said in a briefing.
“We think the markets are conducive. Elections will close the window,” he said.
But the Ayala group is upbeat it can sustain last year’s growth momentum. Net profit rose by a fifth to P22.28 billion in 2015, achieving its goal of earning P20 billion a year ahead of plan.
“We think the economy is in great shape. We think consumer confidence remains, so we are bullish in 2016. We don’t see why we should be worried,” Limcaoco said.
Ayala is earmarking P174 billion in combined capital expenditure this year – higher than the record P130 billion spent last year – to support the growth of its businesses. Ayala managing director Paolo Maximo F. Borromeo said the company is exploring opportunities in Southeast Asian countries that have healthy economies.
Borromeo said Ayala is particularly interested in Indonesia, specifically in water utility, power and real estate, given the nation’s huge market, noting that Manila Water Co. Inc. has sent a business development team to Indonesia.
“We are making a more conscious effort to go international and our focus will be primarily on Southeast Asia across all our businesses,” he said.
The project of Ayala Land, Inc. in Myanmar, however, is on hold, citing difficulties in securing government permits, he said. Despite efforts to expand overseas, the Ayala group’s business will be heavily skewed towards the Philippines, with the contribution of the international operations expected to account for only a tenth of the business, Borromeo said.
In the Philippines, the conglomerate is continuing with its infrastructure push with its interest in bidding for the operation and maintenance of the Light Rail Transit (LRT) Line 2, the P65.09 billion LRT Line 6 and the P170.7-billion South Line of the North-South Railway Project.
“We remain on the lookout for PPP projects. We hope the next administration will continue it,” Borromeo said.
For power generation, AC Energy Holdings, Inc. can more than double this year its 2015 recurring income, Limcaoco said. The holding firm for Ayala’s energy investments contributed a net income of P2.1 billion last year, including an extraordinary gain from the partial sale of its stake in North Luzon Renewable Energy Corp. an 81-megawatt (MW) wind farm in Ilocos Norte.
AC Energy has assembled 600 MW of capacity across conventional and renewable platforms currently in operation and construction. It expects this capacity to reach 1,000 MW this year.
The Ayala group has undergone a transformation that saw the company enter businesses offering services to a larger part of the population, paving the way for investments in education, healthcare, water, telecommunications, power and infrastructure. The conglomerate also has interests in real estate, banking, manufacturing and automotive.
According to the Philippine Stock Exchange, the family-owned Ayala Corporation (AC) was founded in 1834, incorporated in 1968, and was listed in the Philippine Stock Exchange in 1976.
AC is the holding company of the Ayala Group of Companies with business interests in real estate and hotels; financial services and insurance; telecommunications; water distribution and wastewater services; electronics; automotive; business process outsourcing; investments in international or overseas projects and ventures; power generation; transport infrastructure; and education.