THE Ayala group is programming capital expenditure (capex) about P160 billion to P180 billion for this year in a bid to expand its power, infrastructure, industrial or manufacturing, healthcare, and education businesses.
Paolo Maximo F. Borromeo, Ayala Corporation’s (AC) head of corporate strategy and development, said this year’s capex budget is “relatively the same” as last year’s P174 billion.
“If I remember correctly, it’s P160-P180 billion across the group,” Borromeo told reporters after Ayala’s media night on Wednesday.
“We also had high [capex]last year. We’re keeping the pace steady. The harder part is to spend the money.
For us, it’s use it or lose it. We set a high budget but you need to spend it on projects. But in some cases, they are not pushed through,” he added.
Borromeo said the 2017 capex will be funded by internally generated cash flow and debt, partly through its three-year P20-billion bond offering under shelf registration.
He said Ayala will proceed with its P10 billion bond issue sometime in February this year. The company issued the first tranche of P10 billion worth of bonds last year, due in July 2023.
“We’re good capital-wise. The problem is finding the projects to invest in,” Borromeo said.
Last year, a lion’s share or 49 percent of the Ayala group’s capex was allotted to property unit Ayala Land Inc., while the remainder went to Globe Telecom Inc. (21 percent), conglomerate AC (13 percent), Manila Water Company Inc. (9 percent) and other businesses (9 percent).
Of Ayala Corporation’s 2016 budget, 50 percent was invested in power arm AC Energy, 22 percent was used for strategic investment and acquisition opportunities, 14 percent went to banking unit Bank of the Philippine Islands (BPI), 5 percent was allotted to infrastructure vehicle AC Infra, and 9 percent was poured into various investments and businesses.
5 focus sectors
Borromeo said the group will mainly invest in five focus areas in the next few years — power, infrastructure, industrial or manufacturing, healthcare, and education.
“We’re intensive in power and infrastructure, especially power because we just invested in Indonesia. For AC Industrials, we have manufacturing and automotive partnerships. So that’s power, infrastructure, health and education — the five focus areas in the next few years,” Borromeo said.
Earlier this month, AC announced it was investing $30 million in a $150-million, 75-megawatt Indonesian wind farm project in Sidrap, South Sulawesi with partner UPC Renewables Indonesia Ltd. AC also won the bid last year, together with an Indonesian consortium, for the Indonesian and Philippine geothermal power assets of American power giant Chevron.
Borromeo said the group is currently in talks for potential partnership or investment opportunities overseas in the power, semiconductor and water business segments, although he declined to give details.
AC holds the Ayala family’s businesses in water (Manila Water Company Inc.), telecoms (Globe Telecom Inc.), property (Ayala Land Inc.), semiconductors (Integrated Micro-Electronics Inc.), banking (Bank of the Philippine Islands), infrastructure (AC Infrastructure Holdings Corp.), power (AC Energy Holdings Inc.), automotive (Ayala Automotive), healthcare (AC Healthcare Holdings Inc.), and education (LiveIt Investments Ltd.), among others.