Ayala allots $500 M for power projects

MANILA, Philippines - Aiming to sustain its growth momentum on the back of a vibrant local economy, Ayala Corp. is shelling out $500 million in the energy space over the next five years in line with its goal to build a portfolio of around 1,000 megawatts of power capacity.

Ayala Corp. also said it would bid for road, rail and other transport projects.

In a briefing following the company’s annual stockholders meeting yesterday, Ayala chairman Jaime Augusto Zobel De Ayala said the group is raising its capital spending by 38 percent this year to a record P91 billion, bulk of which will be used to develop a record number of residential units and for the modernization of its telecommunications network and investments in the water business.

The conglomerate said it is prepared to bid for the contract to extend and manage the Light Rail Transt Line 1 (LRT 1). The government said it will start the bidding process for the P61.53 billion LRT 1 South Extension project from Baclaran to Bacoor, Cavite this month.

“Now is the time to build infrastructure and put our capex on aggressive mode. In order to be able to continue growing and be part of the country’s growth agenda, we need to participate in lowest price points. In real estate, we recently forayed into socialized housing to cater to the broadest segments of the market,” Zobel De Ayala said.

Zobel De Ayala said while the domestic businesses continue to be the main drivers of economic earnings growth and value in the near future, the group is also aggressively moving in other ventures like energy and infrastructure as it recognizes the need to establish new platforms for longer term value creation.

According to Zobel De Ayala, power and infrastructure are two vital industry groups that are linked to the country’s development goals and future competitiveness. 

“As a business group with significant financial and management resources, a successful track record for building telecom and water infrastructure and the experience of operating within the framework of public-private sector partnerships, we believe we are well positioned to participate in the development of the country’s infrastructure needs,” Zobel De Ayala said.

The group entered the power business last year when it bought 50 percent of a wind farm. It established AC Energy Holdings as its holding company for its power investments. 

AC president Fernando Zobel De Ayala said they have made significant progress in the power business, having assembled around 180 MW of capacity across thermal, wind, hydro and solar technologies. 

Last year, the group formed South Luzon Thermal Energy Corp. in partnership with Trans-Asia Oil & Development Co., a member of the Phinma Group Group, to build and operate a P12 billion 135-MW thermal plant in Calaca, Batangas, targeted to be operational by the end of 2014.

In transport infrastructure, AC was awarded the first tollroad project under the government’s PPP program in December 2011. It expects to complete the 4-kilometer Daang Hari-SLEX connector road by 2013.

The group intends to participate in select tollroad, rail and airport projects which they believe will be strategic and value-enhancing for its real estate portfolio.

“We believe the growth strategy that we are purusing will translate to sustained earnings momentum for Ayala in the coming years. We expect the government’s efforts to accelerate the country’s infrastructure through public private-partnerships will create further stimulus for economic growth and open new investment opportunities for the group,” the younger Zobel De Ayala said.

The government plans to offer as many as 18 projects worth more than P200 billion to investors this year as the Aquino administration seeks to create jobs and further spur the economy.

AC also plans to issue P10 billion worth of bonds to support the continued expansion of new businesses.