Ayala Corp. aims to raise $1 billion to boost its core businesses
DIVERSIFIED conglomerate Ayala Corp. aims to divest certain assets and raise $1 billion by 2023 to fund future investments and improve core businesses in real estate, banking, telecommunications and energy.
“Through 2023, we are committed to fine-tuning our portfolio with a greater focus on realizing value to fund future investments and strengthen our balance sheet, aiming to raise $1 billion in revenue by 2023” , Ayala President Fernando Zobel de Ayala said in a virtual meeting. Friday.
For 2022, Ayala is setting aside 285 billion pesos for capital spending projects across its business, up from its budget of 196 billion pesos last year.
“We are again focused on refining our portfolio, taking into account the changes in the commercial landscape. We are working towards achieving a robust and agile portfolio that can deliver optimal returns across all of its components,” said Mr. Zobel of Ayala.
He said the move will be executed through “a combination of strategic partnerships and divestitures of assets that are no longer strategic to our portfolio or do not meet the desired scale and profitability.”
In March 2022, the company said it completed 61% or $614 million of deals through its energy arm, a follow-up offering, and Manila Water Co., Inc., and through the sale of secondary shares to Razon Group . , among other operations.
“We also executed an ownership-for-share swap with Ayala Land, which involved the transfer of five of our assets to Ayala Land in exchange for its principal common stock. Additionally, we have begun divestment of some of our passive investments in AC Ventures [Holding Corp.]which is an ongoing exercise,” he said.
The company also sold its entire stake in the Muntinlupa-Cavite highway project to the Villar group.
To achieve the remainder of the $1 billion goal, Ayala will work to divest its remaining thermal assets, its interest in LRT-1 and some of its other non-core businesses.
“To date, we have reinvested approximately $360 million of value realization proceeds into value-creating opportunities. Since last year, we have taken advantage of attractive valuations to buy back shares of Ayala and Ayala Land, Inc.,” said Mr. Zobel of Ayala.
“Going forward, proceeds will be redeployed to finance other investments and to pay down debt. We hope to improve our level of indebtedness and evaluate our distribution of dividends according to the growth of our activities,” he said. added.
In 2021, Ayala recorded a net profit of 27.8 billion pesos, up 62.6% from 17.1 billion pesos in 2020.
“We have seen most of our businesses perform better in our second year post-pandemic. Ayala Land, Bank of the Philippine Islands (BPI), Globe Telecom, Inc. and AC Energy Corp. (ACEN) continued to be key drivers of our earnings,” said Zobel de Ayala.
“Despite limited mobility, Ayala Land has been able to capture fairly resilient demand from its residential business and stable office rental segment,” he added.
In 2021, Ayala Land’s net income increased by 40% to reach 12.2 billion pesos.
The real estate developer owns more than 12,000 hectares of land reserves and mainly focuses on large-scale, integrated, mixed-use and sustainable estates.
“Following the success of Makati Central Business District, Ayala Alabang, Cebu Park District, Bonifacio Global City and NUVALI, Ayala Land is at the forefront of sustainability standards and practices in all its developments and acts with integrity, foresight and caution as a responsible corporate citizen,” said Mr. Zobel de Ayala.
The company also achieved 100% carbon neutrality for its shopping malls, offices, hotels and resorts last year, subject to third-party verification in 2022.
Meanwhile, BPI reported a 12% increase in revenue to 23.9 billion pesos.
Mr Zobel de Ayala said the bank sees 2022 as a year of recovery due to high global and domestic inflation, he also said he expects higher interest rates.
“With higher interest rates expected to take place in the second half, BPI sees net interest margin expansion of 15 to 20 basis points,” he said.
“We expect the bank’s loan growth to decline from the 5% posted in 2021 to around 7-10% in 2022. This will be driven by strong growth in credit cards and personal loans, microfinance and consumer loans. businesses. On non-performing loans, BPI expects a benign formation from the current ratio of 2.5% to a maximum of 3% NPL,” he added.
The bank has 1,176 BPI branches, BPI Family Savings Bank and BPI Direct BanKo.
“BPI normalized its loan loss provisions as asset quality improved. Additionally, it continued to leverage its digital leadership in banking, rapidly expanding its digital ecosystem,” he added.
Ayala’s energy platform, ACEN, said profits rose 22% to 5.3 billion pesos in 2021.
It has 3,751 megawatts (MW) of total pro forma attributable capacity at the end of March 2022, of which approximately 3,300 MW or 87% comes from renewable energy sources, mainly in solar and wind technologies, with some geothermal assets and battery storage.
As of the first quarter of 2022, 63% of ACEN’s assets are already in operation, while 37% are under construction.
ACEN’s robust capacity platform puts it in a strong position to reach its 5,000 MW renewable energy target by 2025 even earlier, towards its vision of becoming the world’s largest energy platform. renewables listed in Southeast Asia.
Meanwhile, telecommunications giant Globe’s net income rose 27% to 23.7 billion pesos.
The company has nearly one million AutoloadMax retailers, distributors and business partners nationwide and serves 86.8 million mobile subscribers, including all-mobile broadband, and 3.7 million residential broadband customers.
“Globe has been able to grow GCash to significant scale and financial viability. At the same time, Globe is transforming into a digital solutions platform by providing products and services beyond traditional telecommunications services for meet the ever-changing needs of consumers and businesses,” said Zobel de Ayala.
Ayala said it will also expand its emerging businesses Ayala Healthcare Holdings, Inc. and AC Logistics Holdings Corp. to create “new sources of growth and value” and focus on improving its portfolio investments, including AC Industrial Technology Holdings, Inc., Manila Water, AC Infrastructure Holdings Corp. and AC Ventures.
Trading on Friday, shares of Ayala rose 0.75% or P5.50 to close at P737.50 each. — Luisa Maria Jacinta C. Jocson