Fernando Zobel de Ayala . INQUIRER FILE PHOTO
MANILA, Philippines—Conglomerate Ayala Corp. sold bulk of its treasury stocks overnight to build up cash as it embarks on a $1-billion five-year capital spending program for new businesses, particularly power generation and transport.
In a press statement early Wednesday, Ayala said it raised P6.45 billion overnight from the sale of 15 million treasury stocks at P430 per share. The overnight equity deal was priced at a discount of 6 percent from the company’s closing price of P458 per share on Tuesday.
“Ayala is looking to invest up to $1 billion over the next five years in the transport infrastructure and power generation sectors as it builds a portfolio of power generation assets and as it sets its sights on toll road, rail, and airport projects under the government’s public private partnership program (PPP),” the company disclosed to the Philippine Stock Exchange.
Through arranger Deutsche Bank, offered Tuesday night an initial size of 15 million treasury stocks with an option to upsize by another 5.1 million shares, market sources said. The deal was priced at the lower end of the indicative price range of P430 and P440 per share.
By releasing the treasury shares back to the open market, Ayala expanded its outstanding shares by 2.6 percent based on 577.34 million outstanding stocks prior to the overnight deal. Analysts estimated that the deal account for about 75 percent of Ayala’s treasury stocks, which refer to own shares bought by the company from the open market.
“The company is in a phase of active investment and is eyeing to build new businesses in power and transport infrastructure. In the same manner Ayala invested in the telecom and water sector in the past, we believe the power and infrastructure sectors are critical for the country’s growth and development. We hope to be able to contribute in some measure to the development of these sectors and at the same time create future sources of earnings and value for the group,” Ayala president and chief operating officer Fernando Zobel de Ayala said in a statement.
On top of the Daang Hari – SLEX (South Luzon Expressway) Connector road, which was the first PPP project rolled out and which Ayala won last December, Ayala has expressed interest to participate in other PPP projects expected to be bidded out soon. Projects of interest to the group include the Naia Expressway, the Cavite-Laguna (Cala) Expressway, and the LRT Line 1 extension and operations and management contract.
Ayala recently formed a strategic partnership with Metro Pacific Investment Corp. to jointly pursue light rail projects in the Metro Manila area. Ayala is also keen to participate in the development of airports such as the Mactan Cebu International Airport.
In the power generation sector, Ayala has established a platform of “conventional” and “renewable” technologies and has committed around $100 million of equity on about 180 megawatts of gross generating capacity. It began construction of a 135-megawatt CFB thermal plant in Calaca, Batangas in partnership with the Phinma group’s Trans Asia Oil and Development Corp. It is also currently working on a possible second phase of expansion of the plant.
Recognizing the country’s need for both base load capacity and alternative energy sources, Ayala’s game plan is to gradually build its portfolio of renewable energy sources in solar, wind and hydro technologies. But its investments in these technologies will depend partly on the implementation of the feed-in-tariffs which the government is expected to announce in the coming months. Beyond these initiatives the company continues to actively pursue a robust pipeline of greenfield projects and acquisition opportunities in the power sector.
While the company remains focused on the Philippines, Ayala also continues to explore opportunities in other markets in the region. It recently acquired a 10 percent stake in Ho Chi Minh Infrastructure Investment Co. (CII), a leading player in the infrastructure sector in Vietnam. CII holds toll road concession agreements such as the 15.7-kilometer expansion of the existing Ha Noi Highway which connects the northeastern part of Ho Chi Minh City to Bien Hoa, an industrial center located in the southern part of Vietnam.
Ayala believes this investment provides strategic access to other infrastructure opportunities which may present opportunities for the Ayala group to establish a presence across several sectors in Vietnam.
Ayala’s share price has risen by 46 percent year-to-date with market capitalization of more than P260 billion.