Ayala to raise add’l US$600-M capital for RE investments in PH, overseas

Published November 20, 2020, 7:00 AM

by Myrna M. Velasco

The energy investment arm of the Ayala Group will be raising additional US$500 million to US$600 million from its targeted cash-raising activities next year, so it can cover the bulk of equity that it will need to inject on its targeted renewable energy (RE) projects in the Philippines and overseas.

AC Energy President and CEO Eric T. Francia apprised reporters in a virtual briefing that the company will be on multi-step corporate restructuring by 2021, and that is partly anchored on beefing up its cash hoard for programmed RE ventures – primarily in the Philippines, Australia, India and Vietnam markets.

AC Energy President and CEO Eric T. Francia

To get to the 5.0-gigawatt installations aim of the company until year 2025, Francia said aggregate equity infusion will hover at US$1.8 billion to US$2.0 billion. And of the total, Francia indicated the company already has cash reserve of US$700 million that it can readily commit to projects.

Then on top of the scheduled P20 billion private placement of Singapore wealth fund GIC Private Ltd. (GIC) that is targeted to be firmed up first to second quarter of next year, the Ayala-owned energy firm will also be undertaking stock rights offering (SRO); then a follow-on offering (FOO) at the the Philippine Stock Exchange (PSE).

“Among these three fund raising activities, we expect to raise an additional US$500 million to US$600 million approximately to add to our existing cash reserve of US$700 million today,” he noted.

When lumped together, Francia emphasized “that’s already US$1.2 billion to US$1.3 billion, so we’ll just have US$500 million to US$600 million gap … we’ll deal with that later on because we won’t need all that cash until 2024-2025,” with him adding that “we’ll probably recycle our profits as well or retained earnings as part of the funding requirements to fill up whatever gap there might be.”

In completing corporate transformation for the Philippine-listed energy company, Francia said they are also targeting next year the infusion of their international RE assets into ACEN; and the last step will be sale of secondary shares of parent firm AC Energy Inc. to GIC.

Once the restructuring plan is concretized, he indicated that the Ayala group’s ownership at ACEN will likely settle at 64 or less than 65-percent from currently at 81.5-percent; GIC will have 17.5-percent stake; while the balance will be publicly owned.

To date, ACEN’s power generation portfolio stands at 1,000MW capacity in the Philippines of mixed thermal and RE facilities; while international business has 900MW capacity of all renewables.

At the pace of development that the Ayala firm is now advancing, Francia intimated that they will likely exceed the 5,000MW target cast for 2025; as their attributable capacity may already top 2,500MW next year – and that by far, would be half of their goal through 2025.

“Once we combine the international platform into ACEN next year, on a pro forma basis, ACEN effectively would have 1,900MW. That’s 1,000MW Philippines; 900MW international,” he said, emphasizing that the breakdown is 1,350MW renewables; and 550MW thermal facilities.

“The plan is to scale up our renewables – the 1,350MW, we will bring that to 5,000MW or even more. I’m feeling quite confident that we will exceed our renewables capacity by 2025. Why? Because next year, we would expect our renewables capacity in ACEN to reach 2,500MW, so we expect to be halfway through our 2025 targets as early as 2021,” he stressed.

Francia further noted “to get from where we are today which is around 1,300MW of renewables to more than 5,000MW of renewables, we will also invest in what we regard as complementary technologies to renewables — particularly battery storage, it will be complementary but that will happen over time because we will have to wait for the technology to mature some more; and to be more scalable and competitive.”