Ayala Corp. targets to raise $1B to boost core businesses

DIVERSIFIED conglomerate Ayala Corp. is targeting to divest some assets and raise $1 billion by 2023 to fund future investments and to enhance core businesses in real estate, banking, telecommunications, and energy.

“Through 2023, we have committed to sharpen our portfolio with an increased focus on value realization to fund future investments and strengthen our balance sheet, targeting to raise $1 billion in proceeds by 2023,” Ayala President Fernando Zobel de Ayala said in a virtual meeting on Friday.

For 2022, Ayala is setting aside P285 billion for capital expenditure projects across its businesses, or an increase from its P196-billion budget last year.

“We have a renewed focus on sharpening our portfolio, taking into account the changes in the business landscape. We are working towards achieving a robust and agile portfolio that can deliver optimal returns across its components,” Mr. Zobel de Ayala said.

He said the move will be executed through “a combination of strategic partnerships and divestments of assets that are no longer strategic to our portfolio or do not meet the desired scale and profitability.”

As of March 2022, the company said it realized 61% or $614 million from the transactions through its energy arm, a followon offering, and from Manila Water Co., Inc., and through the sale of secondary shares to the Razon group, among other transactions.

“We have also executed a property-for-share swap with Ayala Land, which involved transferring five of our assets to Ayala Land in exchange of its primary common shares. Further, we have started the divestment of some of our passive investments in AC Ventures [Holding Corp.], which is an ongoing exercise,” he said.

The company also divested its entire stake in the Muntinlupa-Cavite Expressway Project to the Villar group.

To reach the remainder of the $1-billion target, Ayala will be working on divesting its remaining thermal assets, interest in the LRT-1, and some of its other non-core businesses.

“We have so far reinvested around $360 million of the value realization proceeds into value-accretive opportunities. Since last year, we have been taking advantage of attractive valuations to buy back Ayala and Ayala Land, Inc. shares,” Mr. Zobel de Ayala said.

“Going forward, proceeds will be redeployed to fund other investments and pay down debt. We hope to improve our gearing level and evaluate our dividend payout in step with the growth of our businesses,” he added.

In 2021, Ayala recorded a P27.8 billion net income, up 62.6% from P17.1 billion in 2020.

“We have seen most of our businesses performing better in our second year into the pandemic. Ayala Land, the Bank of the Philippines Islands (BPI), Globe Telecom, Inc., and AC Energy Corp. (ACEN) continued to be the core drivers of our earnings,” Mr. Zobel de Ayala said.

“Despite limited mobility, Ayala Land was able to capture the fairly resilient demand in its residential business and stable office leasing segment,” he added.

In 2021, Ayala Land’s net income rose by 40% to P12.2 billion.

The property developer has more than 12,000 hectares of land bank and focuses mainly on large-scale, integrated, mixeduse, and sustainable estates. “Following the success of the Makati Central Business District, Ayala Alabang, Cebu Park District, Bonifacio Global City, and NUVALI, Ayala Land pioneers sustainability standards and practices in all of its developments and acts with integrity, foresight, and prudence as a responsible corporate citizen,” Mr. Zobel de Ayala said.

The company also achieved 100% carbon neutrality for its malls, offices, hotels, and resorts last year, subject to third-party verification in 2022.

Meanwhile, BPI reported a 12% increase in earnings were to P23.9 billion.

Mr. Zobel de Ayala said the bank views 2022 to be a recovery year due to elevated global and domestic inflation, he also said to expect higher interest rates.

“With higher interest rates expected to take place in the second semester, BPI sees an expansion in net interest margin of 15 to 20 basis points,” he said.