Newly-appointed Ayala chairman Jaime Augusto Zobel de Ayala said bulk of the programmed capital budget will go to the continued expansion of telecom unit Globe Telecom amid a highly competitive market.
As it aims to build a stronger platform for growth, Zobel de Ayala said the conglomerate continues to explore opportunities that are large in scale and in sectors "where we believe we can add value with our business-building capabilities."
"We see various opportunities as the government continues to privatize key sectors of our economy and as our country builds up a competitive advantage in outsourcing. We continue to assess these opportunities against our risk and return parameters and evaluate how these fit in our overall portfolio," Zobel de Ayala said.
"The power sector is an interesting sector as we all know our government has been running a deficit for sometime now and is now turning to privatization as a way of attracting capital into key infrastructure projects in the country," he added.
The conglomerate, through recently-formed subsidiary Michigan Power Inc., is eyeing entry into the power sector through the possible acquisition of some assets of the National Power Corp. that are to be privatized.
Ayala Corp. is also looking at increasing opportunities in the fund management business. It recently announced its intention to invest up to $20 million in a new fund to be managed by the New York-based Rohatyn Group. It plans to invest between $100 million and $150 million in other management funds.
The Ayalas are already part of a small group, together with the Temasek Group of Singapore, involved in the fund management company overseeing the fund.
"We want to explore opportunities for value creation by investing in fund management groups which we believe have the ability to provide superior returns given their knowledge and expertise in specific niche industries globally. We are believers in supporting and building on entrepreneurial initiatives Our objective in making investments in funds and with fund managers is to seek higher returns for medium-term investments, develop alliances with global and specialized investors, and have a window into global opportunities," Zobel de Ayala said.
He added that the conglomerate is also considering setting up its own investment fund that that "would allow us to share our expertise with others and to extend our reach and access to both information and capital."
"It would also allow us to tap into the current liquidity in the market," he said.
Ayala Corp. ended 2005 with a cash level of $287 million, sufficient to cover maturing debts through 2007. Total debts amounted to P44.9 billion last year, 26 percent lower than the previous year.
"We believe our current portfolio possesses the key attributes for further enhancement of profitability and value, given the strong market position of our subsidiaries, their established competencies and competitive advantages in their respective industries, and their individual financial strength to pursue their long-term growth objectives. Each of our subsidiaries has embarked on significant strategic initiaties in 2005 which we believe will bring their growth to new levels and overtime translate to increased value for our shareholders," Zobel de Ayala said.
Ayala Corp. owns two-thirds of the country’s biggest property firm Ayala Land, more than a third of the second-biggest lender Bank of the Philippine Islands, and 35 percent of number two phone firm Globe Telecom.