Ayala Group ups power, infra ante to $500M

The Ayala Group plans to spend about $500 million over the next five years to build up its portfolio of power generation assets and expand its interests in infrastructure.

For this year alone, the group plans to invest a record P91 billion mainly in its real estate, telecommunications and water infrastructure businesses. This capital expenditure budget is 38 percent higher than the conglomerate’s capital spending last year.

The group also hopes to put up the necessary facilities to generate capacity of at least 1,000 megawatts in the years ahead.

“While our current portfolio of businesses has provided significant growth, we also recognize the need to establish new platforms for longer term value creation,” Ayala Corp. chair Jaime Augusto Zobel de Ayala told stockholders during their annual meeting yesterday.

Ayala said the conglomerate would focus its investments on power and infrastructure, which he described to be vital to the country’s development and future competitiveness.

Over the past year, the group, through AC Energy, diversified into the power sector, assembling around 180 MW of capacity by tapping thermal, wind, hydro and solar technologies.

“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 partnerships (PPP), we believe we are well-positioned to participate in the development of the country’s infrastructure needs,” Ayala said.

Of the group-wide capital spending budget set for this year, P43 billion will be invested by property unit Ayala Land Inc., P32 billion by Globe Telecom and P11 billion by Manila Water, Ayala chief finance officer Delfin Gonzales said.

One of the PPP projects to be auctioned off by the government this year is the Light Railway Transit-1 extension project, said Ayala managing director Eric Francia. Under the project, 11.7 kilometers will be added to the existing 15-kilometer line all the way to Bacoor, Cavite.

In late 2011, the group won the Daang Hari contract, the first toll road project auctioned off under the PPP program.

Ayala also said that the group would increase its participation in “inclusive” growth.

“Traditionally, we’ve been seen as a company catering to the high-end market,” Ayala said. “To be part of the growth agenda, we are now participating at lower and lower price points.”

As part of this move down the economic pyramid, Ayala said that the group’s property unit would offer residential units worth below P1 million. Also, Globe Telecom will introduce products and lines catering to the C-D-E (economic) segment, while Manila Water will venture into “disenfranchised” areas.

He added that Bank of the Philippine Islands, while already serving five million customers, would further reach out to “unbanked” sectors through BankO—a mobile banking unit set up with Globe Telecom that focuses on microfinance.

On the PPP agenda, it was earlier reported that the Ayala group would vie for the following projects: The Balara water supply, Cavite-Laguna Expressway, Light Railway Transit 2 expansion, Mactan Cebu terminal development, Laguindingan airport operations and maintenance, North-South Luzon expressway connector road.