Aboitiz unit eyes bond issue to fund expansion projects

Conglomerate Aboitiz Equity Ventures (AEV) may return to the local bond market this year to fund part of its capital spending budget that may reach around P50 billion, mostly for power, water and property businesses.

AEV chief financial officer Manuel Lozano said the group was looking at raising funds via a retail bond offering by both Aboitiz Power Corp. (AP) and AEV itself.

In the case of AEV, he noted that the last time the conglomerate tapped the local market was in 2015.

“We’re considering already raising cash for future investments,” Lozano said.

For AP, he noted that there was still P17 billion left unissued out of its existing P30-billion shelf registration with the Securities and Exchange Commission.

He said a similar shelf registration amount might be sought by AEV.

“Our plan is to get a shelf, get it already started next year and then depending on our investments, we can do an offering later in the year or 2020. But it’s very likely that we’ll do something in the retail bond,” Lozano said.

Shelf registration is a mechanism created by the SEC that allows an issuer to register and sell under the same prospectus and other regulatory filing requirements a certain volume of securities on a staggered basis over a three-year period.

Lozano added: “P10 billion a year average (retail bond offering) is not unreasonable, especially since we’re still growing a lot of our business. We’ll probably be in the same range as what AP did.”

“We’re happy to see interest rates going down from where they were months ago. So that bodes well for having a more attractive offer,” he added.

For now, Lozano said AEV was leaning toward peso-denominated offerings. However, he said AEV would consider tapping the offshore bond market in the future if its international businesses like power and Gold Coin would grow faster.

Last July, the group signed a $334-million deal to acquire a 75-percent stake in Singapore-based animal feeds manufacturer Gold Coin Management Holdings Ltd., a major producer of animal feeds and operator of 20 livestock and aqua feed mills across 11 countries in Asia. This is the biggest offshore investment made by AEV’s Pilmico International in the Asia-Pacific region to date.

For power projects, AEV is looking at expanding within the region and is now in talks for opportunities in Indonesia, Malaysia, Vietnam and Myanmar. In Indonesia, the group is looking at various types of power businesses from geothermal to solar and hydro. In Vietnam, it is looking at solar and wind projects.

“I’m hopeful that by 2019, we’ll really see that breakthrough in the power business and grow our international (operations),” Lozano said. “At the same time, we’re doing so much business development on local renewable energy.” —DORIS DUMLAO-ABADILLA