The Philippines is set to become a hotbed of mergers and acquisitions (M&A) activity this year, driven by new infrastructure projects, advancements in telecommunications, and a shift towards green energy, the PwC Philippines said.

In a report, PwC Philippines, a professional services firm, noted the country's strong M&A performance in 2024, particularly in the technology and energy sectors.

"The year 2024 was a promising period for M&A in the Philippines, fueled by progressive investment policies and strong performances in key industries," said PwC Philippines. "The technology sector saw significant M&A activity, driven by digital transformation in cloud computing and IT services.

"Additionally, the country continues to show potential in integrating AI across various industries, with organizations expressing interest in these technologies despite existing digital skills gaps,” it added.

The energy and natural resources sector also posted strong M&A performance, achieving a total deal value of $3.7 billion across 21 transactions in 2024 driven by investments in solar and wind projects.

A notable transaction cited by the PwC was Aboitiz Power Corp.’s $2.2 billion acquisition of several power stations, aligning with its strategy to expand generation capacity and meet increasing energy demand while also focusing on sustainable energy and enhancing power supply reliability.

Renewable energy initiatives bolstered the sector's growth, particularly through the Department of Energy's (DOE) Green Energy Auction Program (GEAP), which streamlined bidding for clean energy capacities.

The Philippine Energy Plan (PEP) further enhanced M&A attractiveness through its focus on energy security and infrastructure modernization.

Regulatory reforms, such as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, have introduced tax incentives and encouraged foreign investment in the energy and telecommunications sectors.

Additionally, the CREATE MORE Act, enacted on 11 November, aims to streamline processes; support micro, small and medium enterprises (MSMEs); and foster innovation among small businesses.

PwC said these reforms are designed to enhance competitiveness and promote participation across key industries.

Moreover, the National Fiber Backbone Project, led by the Department of Information and Communications Technology (DICT), has been crucial in enhancing nationwide connectivity.

PwC said this initiative accelerates the deployment of high-speed internet infrastructure, facilitating digital transformation in telecommunications, e-commerce and financial technology. It has also attracted investments in sectors that depend on robust digital networks, such as IT services and fintech.

"Looking ahead, new infrastructure projects, advancements in telecommunications and a shift towards environmentally-friendly energy sources are set to drive the country's growth," PwC said.

"These developments, coupled with investor-friendly policies like the CREATE MORE Act and regulatory reforms that encourage foreign participation in sectors such as energy and telecommunications, position the Philippines as a hotspot for thriving M&A activity. This environment offers exciting opportunities for strategic partnerships and success, particularly in sectors like renewable energy, real estate, technology and financial services,” it concluded.