Aboitiz plans to list shares of power firm subsidiary

Aboitiz Equity Ventures Inc. (AEVI), the listed investment holding company of the Aboitiz family, plans to list the shares of its subsidiary, Aboitiz Power Corp., as it seeks to further build a solid financial base.

A company official said AEVI is consolidating all its power generation and distribution assets into one company, Aboitiz Power, to ensure long-term shareholder value and further boost the financial standing of the surviving company in preparation for its listing on the exchange within the first half of 2007.

The official said Aboitiz Power plans to list its shares by way of introduction. Under this scheme, shares of a company will be listed without undertaking an initial public offering.

Around 20 percent of Aboitiz Power will be sold to the public to raise capital for greenfield projects and to bid for the generation assets to be auctioned by the National Power Corp., the same official said.

Based on its proposal, Aboitiz Power will serve as the parent company of Hedcor Inc., Luzon Hydro Corp., Western Mindanao Power, Southern Philippines Power, Davao Light & Power, Cotabato Light & Power, Visayan Electric, San Fernando Electric, Subic Enerzone, and Aboitiz Energy Solutions.

These corporations including Aboitiz Power had a combined net profit of P1.98 billion in the first three quarters of the year.

Of the total, P634 million was contributed by Davao Light, the third largest power distribution utility in the country. Luzon Hydro, a joint venture between the Aboitiz Group and Pacific Hydro Ltd. of Australia, chalked a net income of P568.65 million followed by Visayan Electric with a net income 339.49 million.

Visayan Electric is the second largest power distribution utility serving Metropolitan Cebu, the second largest city in the Philippines.

Hedcor, the pioneer in the development and operation of environment friendly mini-hydro power plants (below 50 megawatts of electricity) in the Philippines, contributed P198.14 million followed by Western Mindano Power Corp. with P75.77 million.

Western Mindanao is a joint venture between Aboitiz Power, Alsons Group and SingPower. It owns a 100 megawatt diesel power plant in Zamboanga.

San Fernando Electric posted a net profit of P36.62 million, Cotabato Light, P35.46 million, Southern Philippines P31.7 million, Surbic Enerzone P28.1 million, Aboitiz Energy Solutions P22.67 million; and Aboitiz Power, P6.12 million.

Macquaries Equities Research said AEVI’s future earnings will be boosted by the power business as the holding company has identified the power sector as a priority growth area.

"From the privatization of the National Power Corp.s (Napocor) generation assets, we see an opportunity for Aboitiz Equity Ventures," said Macquarie which included AEVI in its report on emerging market leaders.

AEVI said earlier it was bidding for the Masinloc coal-fired power plant in Zambales, which is the first of the big plants Napocor is selling in the first quarter of 2007. It is also bidding for Napocor’s 360-MW Magat plant in Nueva Ecija, through a joint venture with SN Power Holding Singapore.

The company is eyeing to operate a 200-megawatt coal power plant to supply requirements of Visayan Electric Co.

In addition, AEVI is in talks with four or five foreign companies for a possible partnership to bid for the 2,203 megawatt generating assets of US-based MIrant Corp. in the Philippines, worth as much as $3 billion.