A CFO for generations

If you think holding the purse strings of a household is tough enough, imagine how it is to be in the shoes of Jose Teodoro “TG” K. Limcaoco.

As Ayala Corporation’s chief finance officer (CFO), Limcaoco is tasked to watch over P900 billion in assets of the country’s oldest, as well as one of the largest, conglomerates with diverse interests in real estate, financial services, telecommunications, water infrastructure, electronics manufacturing, power generation, transport, automotive, healthcare and education.

More than being Ayala Corp.’s CFO and Finance Group Head, he also serves as its Chief Risk Officer and Chief Sustainability Officer.

“The breadth of responsibility, the things I get to see and work with, is just amazingly wide: from real estate, to telecom, to banking, healthcare and education. It’s very rare for a company to get involved in so many areas that touch lives,” he says.

Ayala Corp. chairman and CEO Jaime Augusto Zobel de Ayala shared that Limcaoco played a crucial role in the growth of the conglomerate. “He has a wide lens in which he views things. Our conversations stretch beyond the financials and encompass what we want Ayala to become,” he said.

It was this unique optic on the Ayala business that earned Limcaoco the coveted title “ING FINEX CFO of the Year” from Dutch financial giant ING Bank, N.V., and the Financial Executives Institute of the Philippines (FINEX), an organization of more than 800 of the country’s top financial executives and business leaders. As the 11th awardee, Limcaoco continues to raise the bar for the prestigious annual search for the country’s most outstanding CFO, which started in 2007.

The CFO’s DNA

Typical financial executives would only lean towards number-crunching as a career decision while still early in their professional lives. Limcaoco, however, has always had numbers embedded in his DNA.

“My father was a banker. My father and his father formed a bank. I started my career as a banker, and I think what is key about being a banker is being faithful and true to your reputation,” he says.

This pedigree and passion for numbers, logic and discipline naturally gravitated him towards math. “Math makes you a very logical person. I think the secret of math is it makes you very disciplined: you look at things in an orderly and logical behavior, and quantify your decisions in a very straightforward manner,” he explains.

The natural-born numbers man graduated at Stanford University in 1984 where he earned his BS Mathematical Sciences degree (Honors Program). Four years later, he obtained an MBA (Finance and Investment Management) at Wharton School of the University of Pennsylvania. With an Ivy League education tucked under his belt, he landed lucrative jobs at JP Morgan & Co. in New York and Singapore, and with BZW Asia as Philippine country head.

In 1989, he returned to the Philippines “to make a name” for himself. “I could have stayed in New York but I don’t think I could have risen to where I am now by working in a U.S. organization. I never thought I would live outside the country,” he added.

Prior to joining Ayala Corp. as a managing director in 1998, Limcaoco held various posts within the Ayala Group, including being president of BPI Family Savings Bank, the investment banking arm of BPI Capital Corporation, and online shopping site myAyala.com. He also served as president of the Chamber of Thrift Banks from 2013 to 2015.

Turning numbers into science

When he became Ayala Corp.’s CFO in 2015, he said he inherited a “topnotch finance team” that made his new job easier. Yet even as the conglomerate was already doing well, he saw the need to streamline its decision-making process molding it to be much “faster (and) be nimbler, but still possess the same discipline and manner that Ayala Corp. is known for.”

One of his priorities was the way Ayala Corp. allocates capital, given the scale and diversity of investments that the 183-yearold conglomerate and its subsidiaries have been making in projects, some of which take years to finish. For 2017 alone, Ayala Group unveiled a capital expenditure of P185 billion, its highest to date.

“TG has remodeled the whole capital allocation process in Ayala Corp. It’s a complex role, given the many investments we have. He has brought a science to it, and moving from the world of art to science in terms of dealing with the complexity of decisions. He’s done an excellent job,” attested Zobel de Ayala.

To instill structure and discipline in investment management, the Ayala CFO centralized smaller new businesses into a wholly-owned subsidiary called AC Ventures. This enables the Ayala Corp. Board of Directors to watch over a bigger picture of Ayala’s wide-ranging businesses and make it more accountable to shareholders instead of focusing on new individual investment projects.

Limcaoco also engineered a $400-million “fixed-for-life” perpetual bond offering to help fund the conglomerate’s long-term investments. In theory, these long-dated securities never mature and thus can be considered as equity rather than debt. This prompted investors, particularly those attracted to the Ayala name and wanting to re-allocate from their pure fixed income investments, to snap up the instrument, which fetched a huge demand of $2.5 billion. The trailblazing issue — the Philippines’ first international corporate issuance in 2017 — also signaled Ayala’s big comeback to the offshore debt market after a long hiatus.

He was also instrumental in elevating the focus on risk management and improving Ayala Corp.’s technical view of risks involved in its different businesses. Chief Risk Officers are designated in all the business units, not just in the holding firm, and comprise the Risk Council that ensures the conglomerate’s overall risk profile.

For the Ayala CFO, building a riskbased culture in the organization is not a herculean task. “When you ask around Ayala, what is the biggest risk? It boils down to the first question: what are we protecting?” he says. “Our number one asset is our reputation. When everyone gets that, risk management becomes very simple. In everything we do, we always have to make sure our reputation remains as it is over the years.”

Building a lasting legacy

For John Francia, president of Ayala Corp. Energy Holdings, Inc., the development arm of the Ayala Group in the energy sector, Limcaoco’s deep commitment to preserving the Ayala

legacy for many generations, truly sets him apart.

The Ayala Group, in fact, aligns its business strategy with meeting the United Nations’ 17 Sustainable Development Goals (SDGs). “We would not go into a business just for financial reasons. What we want to do is make a change, innovate, and improve lives. When we see a problem that exists, we ask ourselves: ‘Is there a business model that can solve this problem? Is there something in this industry or in this business that we can enter into to solve the problem?’ And then we ask: ‘Is this scalable?’ If it’s not scalable, even if it’s profitable, then it’s not sustainable. That’s the way we view things,” says Limcaoco.

Ayala is also able to clearly articulate to its shareholders and the public how it creates value in the short-, medium- and long-term through its integrated annual report, which Limcaoco pioneered in the group. The Group takes pride in its having the first annual report in the Philippines and in Southeast Asia to adopt the integrated reporting framework, which details how a company’s capital and corporate behavior are aligned with the broader goals of financial stability and sustainable development.

To Jaime Augusto Zobel de Ayala, who was recently accorded the recognition of United Nations Sustainable Development Pioneer Award — the first in Asia — the CFO’s dual role as Chief Sustainability Officer is vital in a company like Ayala that is now on its seventh generation.

“The business world in the next 10 years is going to change far more rapidly than it did in the past. There’s a great deal of disruption taking place, some technology-driven, some of it are changes in the geopolitical landscape. We have to be far nimbler, far more astute in the way we analyze opportunities and investments as we move on,” says Zobel de Ayala. “TG is essential in helping us sift through these different trends [so that we will] remain ahead of the curve in analyzing investment opportunities.”

For Limcaoco, modern CFOs “need to have a deeper and wider knowledge of what’s happening to the world, not only in the markets, but also on which technology and business practices are evolving, which industries are changing, understanding what’s happening in politics and in society, why is the rise of populism coming through and what’s happening to western democracies.” He added, “All these are changing the way the world functions. The only way you can think strategically is to understand all these key changes going on in the world.”

This makes it imperative for a CFO to look beyond the numbers and into a longer horizon. “We’re beyond the stage when you have to think of a company that’s looking to survive next year or when results matter for the next year. The new thinking for the CFO and CEO is: How do you get the company to last forever? You want a company to last for a long time, even for generations.”

These mounting pressures to perform could make life really stressful for a CFO. To Limcaoco, who thrives running in international marathons and engaging in mental math in his free time, these pressures only make the CFO’s job “a lot more challenging and more exciting.”