Ayala to spend over P200 billion in 2018
THE AYALA group will be setting aside over P200 billion in capital expenditures this year, a top official said last week.
Ayala Corp. (AC) Chief Finance Officer Jose Teodoro K. Limcaoco said the conglomerate’s spending plan this year will be bigger than the P185 billion it has set for 2017, as it continues to grow its property, telecommunications, water, power, industrial, health care, and education businesses.
“As a group, it’s bigger than the 2017 plan… It’s more than P200 billion,” Mr. Limcaoco told reporters in Makati City on Friday.
In previous years, Ayala Land, Inc. (ALI) has cornered bulk of the group’s capex.
In a separate interview, ALI Chief Finance Officer Augusto Cesar D. Bengzon said they are likely to spend over P100 billion next year.
“This year so far it looks like there’s demand, so we’ll probably launch similar, if not a greater amount of residential projects... More projects equals to more capex,” Mr. Bengzon said.
Meanwhile, Mr. Limcaoco noted AC’s banking unit, Bank of the Philippine Islands, will be conducting a stock rights offering, which will be considered part of the capex.
“Just the BPI rights offering, that’s capex already for us. And we will take our proportionate share, BPI believes they’re trying to do a rights offering of P40-50 billion. We’re about 48%, so we’re talking P20-25 billion,” Mr. Limcaoco said.
AC’s core businesses also include Globe Telecom, Inc. and Manila Water Co., Inc. The country’s oldest conglomerate has also been ramping up the development of its industrial, power, education, and health units to further accelerate growth.
DUE DILIGENCE
The listed conglomerate earlier disclosed it is looking at the potential merger of its education unit, Ayala Education, Inc. (AC Education) with the Yuchengco group’s House of Investments, Inc. (HI). AC Education currently has a total of 23 schools, the largest stand-alone chain of private high schools in the country.
On the other hand, HI’s iPeople, Inc. operates Mapua University through Malayan Education System, Inc. Mapua has two subsidiaries, Malayan Colleges Laguna and Malayan Colleges Mindanao.
“We’re doing due diligence now. The goal is to sign definitive agreements by the first quarter and then seek approval from the PCC ( Philippine Competition Commission) thereafter,” Mr. Limcaoco said.
Should the proposed merger push through, AC and the Yunchengco group will be able to cover the full spectrum of the education cycle. Mr. Limcaoco also noted one of the goals is to further develop APEC schools.
“I think we’re at 23 schools today, and I think we’re trying to work on the 23 first. I guess we will have to work with the Yuchengcos when this merger pushes through to see what happens,” he said.
HEALTH CARE
Meanwhile, the AC executive said they are looking to include hospitals under its health care business as well. ALI, which operates the chain of Qualimed hospitals along with the Mercado medical group, is mulling the sale of its hospital business.
With this, Mr. Limcaoco said they looking at transferring the business under Ayala Healthcare Holdings, Inc.
“We will participate if we think the values are right. Pwedeng kami ang bumili ( We can buy it). But we have a partner there, so the partner has to agree also,” he said.
AC has a five-year target to hit a net income of P50 billion by 2020, banking on the growth of its core and relatively newer businesses.
The conglomerate’s attributable profit stood at P23.2 billion in the first nine months of 2017, 18% higher year on year, following a 21% increase in revenues to P170 billion during the period.