Ayala Corporation news ulit

AC Energy inks Citicore deal

AC ENERGY Holdings, Inc. has forged a power supply agreement with retail electricity supplier Citicore Energy Solutions, Inc. (CESI), the energy development unit of Ayala Corp. said.

In a statement, AC Energy quoted CESI President Manolo T. Candelaria as saying the partnership would revitalize the power generation company’s portfolio ahead of the implementation of rules governing renewable portfolio standards (RPS).

CESI is a unit of Citicore Power, Inc., a renewable energy company that launched in February last year a 25-megawatt (MW) solar plant in Silay, Negros Occidental. Citicore Power is looking at solar, wind, hydro, and biomass projects in the Philippines and Asia. 

“This will be a synergistic partnership between AC Energy and Citicore Power as we both share the same mission to employ excellence and technological innovation while preserving the environment through the use of clean and sustainable energy,” Mr. Candelaria said.

The RPS rules, which policy makers expect to implement at the start of 2018, require power distributors to source a portion of their requirement from renewable energy. The Energy department is getting the comments from industry participants before issuing a circular.

“We hope to explore more renewable energy partnerships of this kind moving forward,” Mr. Candelaria said.

The two did not disclose the power capacity involved in the power supply deal.

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Ayala splits energy business into two

Ayala Corp. has split its energy business into two wholly – owned subsidiaries, one for renewable energy and another for thermal energy, for greater flexibility in expanding its project portfolios.

In a disclosure to the Philippine Stock Exchange yesterday, the Ayala holding company said it received its board’s go ahead to form two wholly-owned platforms, namely AC Renewables Inc. and ACE Thermal Inc.

In its restructuring program, Ayala will create a new holding company, AC Renewables, and then transfer all renewable assets under the new subsidiary.

The company will then rename the existing thermal holdings company to ACE Thermal.

Meanwhile, Ayala will retain AC Energy as its umbrella brand for its energy group of companies.

“In terms of our architecture, we will retain the AC Energy, referring to the energy business group. Strictly speaking, there’s no holding company anymore for all our assets,”  AC Energy CEO John Eric Francia said in a briefing yesterday.

“AC Energy has scaled up rapidly over the last five years, and we believe that having these two exciting platforms will enable focused strategies and accelerate our growth,” AC Energy chairman Fernando Zobel de Ayala.

Francia said the restructuring will allow the group more flexibility to pursue developments in renewables and conventional power.

“We recognize that renewables and conventional power are two distinct businesses that attract different types of investors. This move therefore provides AC Energy a sharper proposition and greater flexibility in the event that we broaden our investor base for our platforms,” he said.

“The investor base and sources of capital, which we obviously need to grow, view these businesses in a differentiated manner,” he said.

Earlier, AC Energy has targeted to double its attributable capacity to 2,000 megawatts (MW), closing the gap between fossil fuel and renewable energy.

But with the separation of the renewables and conventional power entities, Francia said the 2,000 MW target will no longer be communicated and targets will be set separately.

Currently, AC Energy has 1.3 gigawatts (GW) of conventional power and around 300 MW of renewable energy projects.

“For renewables, the 1,000 MW target, that stays. For thermal, we’re already at 1.3 GW… so we are now in the process of updating our business plan for the thermal side. We still have plans of growing it,” he said.

The company has three renewable energy projects: the 52-MW Northwind Power Development Corp. in Bangui, Ilocos Norte; the 81-MW wind farm in Pagudpud, Ilocos Norte through its affiliate NLREC and the 18-MW solar plant in Negros Oriental, a joint undertaking with Bronzeoak Clean Energy Inc.

Meanwhile, its conventional power projects include the 668-MW GN Power Dinginin Ltd. Co. coal plant in Bataan, the 604-MW GNPower Mariveles, the 2x135-MW coal-fired power plant in Calaca, Batangas under South Luzon Thermal Energy Corp. and the 4x135- MW coal-fired power plant in Kauswagan, Lanao del Norte in Mindanao through GN Power Kauswagan Ltd. Co.

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AC Energy eyes 150-MW diesel power plant in Rizal

The energy business group of Ayala Corp. is looking to develop a 150-megawatt (MW) diesel power plant in Pililia, Rizal to serve the peaking requirements of the Luzon grid, its top official said.

AC Energy CEO John Eric Francia said  the group is now going through pre-development process for the diesel power plant.

“[We’re now in] permitting, [getting] ECC (environmental compliance certificate). We’re doing the studies now. We’re hopeful that we’ll get to start the construction as soon as we complete all the requirements,” he said.

In October 2017, AC Energy DevCo Inc. was cleared to conduct a grid impact study (GIS) on a 300-MW diesel modular generator set power plant in Pililia, Rizal.

AC Energy DevCo is affiliated with Ayala Energy Holdings Inc., which took over Bronzeoak Philippines Inc. It owns  solar projects in Negros — San Carlos Solar Energy, Negros Island Solar Energy and Monte Solar Energy.

Francia said the peaking plant will be able to complement the intermittent supply being provided by renewable energy (RE) projects once RE policies are in place.
“We believe the country will need more peaking and reserve, ancillary capacity…especially in a world where you inject more renewables,” he said.

“This is in line with thinking that RPS (Renewable Portfolio Standards) will succeed. You will see intermittency…and you need ancillary for that,” Francia said.

A provision of the Renewable Energy Act of 2008, RPS mandates power industry players to produce and source a certain percentage of electricity from RE sources such as biomass, waste-to-energy technology, wind energy, solar energy, run-of-river hydroelectric power systems, impounding hydroelectric power systems, ocean energy and geothermal energy.

Last month, Energy Secretary Alfonso Cusi signed a circular which prescribes the rules and guidelines in the establishment of RPS for on-grid areas which mandates distribution utilities (DUs), retail electricity suppliers including those power generation companies serving directly-connection customers to source or produce a certain percentage of their electricity requirements from eligible RE resources. 

The RPS for on-grid areas is initially anchored on the country’s aspirational target of 35 percent RE share in the energy mix by 2030, which will be reviewed under the forthcoming updating of the National Renewable Energy Program.

The DOE has set 2018 and 2019 as transition years to prepare the power industry in developing their compliance plans to the minimum RPS requirements.

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AC Energy developing 300 MW solar power projects in Vietnam

 AC Energy, the power business of the Ayala Group, is developing over 300 megawatts (MW) of solar power in Vietnam after partnering with a local firm.

In a statement, AC Energy said it has teamed up with Vietnam’s BIM Group to jointly develop over 300 MW of solar power in Ninh Thuan province.

“AC Energy is very keen to participate in the fast-growing Vietnam power sector, with pioneering investments in renewable energy. We are delighted to partner with BIM Group, which has a significant presence in Ninh Tuan province, which in turn has among the best solar irradiance in the country,” AC Energy CEO John Eric Francia said.

BIM Group is a diversified corporation in Vietnam, successfully establishing its mark in four main business fields, namely: tourism development and real estate investment, agriculture – food, commercial services and renewable energy.

It has a significant experience in business development in Ninh Thuan, the host province for the solar project.

The partners are starting with an initial phase of 30 MW, which broke ground on Jan. 23, with Conergy Asia & ME as the construction partner.
Investment for this phase is expected to reach 800 billion dong, equivalent to roughly P1.8 billion, and to be completed within the year.

Once completed, the partners envision the solar project to be expanded by an additional 300 MW.

Earlier, AC Energy said Vietnam will be its second regional investment in Asia since it has a similar macroeconomic picture with Indonesia and the Philippines.

The Ayala Group also has presence in Vietnam through Manila Water Co. Inc. under local units Thu Duc Water and Kenh Dong Water as well as through infrastructure firm Ho Chi Minh City Infrastructure Investment Joint Stock Co. (CII).

The Ayala power unit is exploring possible investments and partners for solar and wind projects because the target country also has an ongoing feed-in tariff (FIT) scheme for solar and wind project.

The Vietnamese government came out with FIT for solar, which would be valid from June 1, 2017 to June 30, 2019. There is no deadline for wind.

“There are very advanced progress in terms of renewables. Solar is the higher priority now because there’s a deadline set, which is June 2019. Our efforts are primarily focused on solar in Vietnam,” Francia said.

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...good investment yan Tutuban

Ayala tightens hold on Tutuban Center owner

PROPERTY GIANT Ayala Land, Inc. (ALI) tightened its grip on the owner and developer of Tutuban Center in Divisoria after acquiring a block of shares at a discount to the prevailing market price.

In a disclosure on Monday, Prime Orion Philippines, Inc. said its key shareholder Ayala Land purchased 202.77 million shares of the company worth P496.80 million from Genez Investments Corp. through a block sale at the Philippine Stock Exchange.

The shares, which represent 4.14% of Prime Orion’s outstanding capital, were priced at P2.45 apiece, a discount to the stock’s previous close of P2.68 each.

Shares in Prime Orion shed 24 centavos or 8.96% to settle at P2.44 apiece on Monday.

Ayala Land took over Prime Orion in 2016 when the former subscribed to 2.5 billion common shares of the latter at P2.25 each for a total of P5.63 billion.

Prior to the acquisition of shares held by Genez Investments, Ayala Land owned 51.06% of the total outstanding shares of Prime Orion.

Prime Orion owns Tutuban Center in the Divisoria Tutuban Complex, which sits on a 20-hectare property that has 60,000 square meters in gross leasable area. The planned transfer station for the P287-billion North South Railway Project will connect to the Light Rail Transit Line 2 West Station.

The North South Railway Project will have a 56-kilometer commuter rail from Tutuban to Calamba, Laguna, and a 478-km long-haul rail from Tutuban to Legazpi, Albay. It is expected to boost the area’s daily foot traffic of 100,000 by 400,000.

Prime Orion had announced plans to double its leasable area and convert the property into a mixed-use development, using ALI’s investment.

At the start of the month, Ayala Land also raised its interest in Malaysian developer MCT Bhd. to 50.19%, cementing the Philippine firm’s control over the latter.

Under its 2020 Vision, Ayala Land is targeting a 20% annual growth rate to hit a net income of P40 billion.

For the first nine months of 2017, ALI saw an 18% increase in earnings to P17.8 billion, on the back of a 16% growth in revenues to P98.9 billion.

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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.

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. 

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.

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...ayos! KIA naman ngayon after Honda and Isuzu Smile

Ayala bidding for Kia distributorship in PHL

THE AYALA GROUP plans to expand its automotive dealership business after making a bid to secure the rights to distribute South Korean car brand Kia in the Philippines.

In a disclosure to the stock exchange on Wednesday, the conglomerate said the group emerged as the “preferred bidder” to begin negotiations for the Kia distributorship in the Philippines, but no definitive deal has been reached.

A wholly owned subsidiary of Ayala, AC Industrial Technology Holdings, Inc., through one of its group companies, received the notice from the regional headquarters of Kia Motors Asia.

Kia has a stable of brands comprised of Picanto, Rio 5-door, Soul, Sportage and Sorento and Grand Carnival.

The Ayala group consolidated its automotive and manufacturing assets under AC Industrials last year after transferring its ownership of Integrated Micro-Electronics, Inc. (IMI) to its wholly owned subsidiary.

AC Industrials holds the group’s interests in automotive dealerships and distributorships for Honda and Isuzu as well as a 100% stake in Automobile Central Enterprise, Inc. (ACEI) and a 100% interest in Adventure Cycle Philippines, Inc. (ACPI).

ACEI is the official importer and distributor of Volkswagen vehicles in the Philippines, while AC Industrials also manufactures KTM motorcycles and, through ACPI, is the official distributor of KTM motorcycles in the Philippines.

The Ayala group 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.

Ayala Corp. has diversified business interests that include real estate, financial services, telecommunications, water infrastructure development and electronics manufacturing. It has recently entered new sectors with investments in power generation, transport infrastructure development, health care, education and e-commerce.

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...eto pa Tongue

AC Energy to invest $300M in Vietnam venture

AC Energy Holdings, Inc. expects the investments for its solar power venture in Vietnam to reach around $300 million as the Ayala-led company ramps up spending for power generation projects this year.

“[In] Vietnam, we’re hopeful that we’ll break ground on much more than 30 megawatts (MW) this year,” Eric T. Francia, who is also chief executive officer of AC Energy, told reporters on the sidelines of the Asia CEO Forum on energy issues at Manila Marriott Hotel in Pasay City on Wednesday.

Mr. Francia said the industry rule-of-thumb is a capital expenditure of around $1 million to build 1 MW of solar capacity. AC Energy had said the target capacity in Vietnam could increase by 300-MW more.

Ayala Corp.’s business arm in the energy sector previously disclosed an investment of 800 billion Vietnamese dong, or $35.21 million, for the initial 30 MW it plants to build this year. It has partnered with the Bim Group of Vietnam to jointly develop the solar power projects in Vietnam’s Ninh Thuan province.

“As long as we’re [breaking ground] in the first half, we’re okay,” he said about meeting its target 2018 commercial operation date for the initial phase.

The investment in Vietnam is part of the company’s capital expenditure budget this year, which will largely fund two big power projects in the Philippines — one in Luzon and another in Mindanao.

“I can’t give you an exact number but a lot of our capex [will go] to fund our ongoing coal plant construction — Mindanao and Dinginin. So it’s in the hundreds of millions of dollars range,” Mr. Francia said.

He was referring to the 668-MW GNPower Dinginin Ltd. Co., in which the company has a 50% stake; and the 552-MW GNPower Kauswagan Ltd. Co., which it controls with an 85% stake.

Mr. Francia said AC Energy closed 2017 with a total of 1,600 MW in attributable capacity or the megawatt-equivalent of its economic stake in various completed power projects.

AC Energy is one of the fastest growing regional energy platforms with development, operations and retail supply capabilities. Its parent firm has previously committed an investment of $1 billion to meet or even exceed its 2,000-MW target by 2020. It expects at least 1,000 MW of the projected capacity to come from renewable energy sources.

“We have identified sources of funding already for our next wave of growth,” Mr. Francia said.

Based on what is “visible” at present, the AC Energy official said the company would not exceed the 2,000-MW target this year.

“Maybe we can get to around 1,800 [MW] attributable [capacity by yearend]. Whether we can reach or exceed 2,000 [MW], that is still a question mark. We’re trying certainly, but we’re very close. We could be one or two years ahead,” Mr. Francia said. “Hopefully by next year, we’ll hit the 2,000.”

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AC Energy aiming to complete 3 biomass projects in 2 years

AYALA CORP.’S energy unit targets to finish in the next two years the three recently acquired biomass projects to qualify for the guaranteed power rate offered under the extended feed-in-tariff (FiT) system, a company official said.

“We will rush it (construction). Tatapusin namin in two years itong tatlo (We will finish the three projects in two years). These will all be completed,” Don Mario Y. Dia, AC Energy Holdings, Inc. senior vice-president for external affairs, told reporters.

Mr. Dia was referring to the three plants under Negros Island Biomass Holdings, Inc. (Islabio), a company acquired last year by Presage Corp., a unit of Ayala-led AC Energy.

Islabio owns shares in three subsidiaries, namely: the 20-megawatt (MW) San Carlos Biopower, Inc., the 25-MW South Negros Biopower, Inc. and the 25-MW North Negros Biopower, Inc. They are all engaged in biomass power generation and sale of electricity.

While the San Carlos project has been delayed, Mr. Dia said it would be moving into the commissioning phase in the next two to three months.

“So that will be our first biomass that will be under FiT,” he said, referring to the system that offers a fixed rate for 20 years for the electricity produced by developers of solar, wind, biomass, ocean energy and run-of-river hydro power plants.

The FiT is granted to the first to finish projects by end-2017 or earlier if the limited capacity set by the Department of Energy (DoE) had been fully subscribed.

For biomass development, 19 projects with a total capacity of 138.61 MW were awarded certificates of eligibility as of November last year, or a balance of 111.39 MW out of the 250-MW target.

The DoE has said it is keen on extending the biomass FiT for two years.

Mr. Dia is hopeful the projects would be given consideration for the FiT. He said the first project was already inspected by the DoE after completing 80% of its electromechanical component. 

“There’s an inspection done by the DoE. That has been done and once you get through that, they will endorse your plant to the ERC (Energy Regulatory Commission) for the final inspection,” he said.

Even ahead of the ERC’s awarding of the certificate of compliance, the two other projects are being constructed.

“We’re proceeding… We are of the impression that it is already signed,” Mr. Dia said, referring to a DoE circular that would extend the granting of the FiT.

He placed the cost of the projects at $45 million each, or a total of $135 million.

Bronzeoak Philippines, Inc., the projects’ proponent, previously said that ThomasLloyd CTI Asia Holdings was the principal financial sponsor. WBE (Hong Kong) International Green Energy Ltd., another shareholder, will provide engineering and construction services. Bronzeoak has since been acquired by AC Energy.

Last week, Energy Undersecretary Jesus Cristino P. Posadas told a forum that the FiT for biomass and run-of-river hydro “may be given consideration for the extension of two years or upon subscription of the set installation target capacity, whichever comes first.”

Mr. Posadas was quoting a speech prepared by Energy Secretary Alfonso G. Cusi, who earlier said that he was considering the extension for the two technologies, but definitely not for solar and wind.

Biomass projects that were completed by 2016 were awarded a FiT of P6.63 per kilowatt-hour, while those completed last year qualified for the P6.5969 degressed rate.

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...schools naman binibili?

Ayala unit buys National Teachers College

AYALA Corp. (AC) is strengthening its foray into the education sector with the acquisition of majority of National Teachers College (NTC), a transaction it believes would be strategic for its proposed merger with the Yuchengco group’s education business.

In a disclosure to the stock exchange on Thursday, the country’s oldest conglomerate said its wholly owned unit AC Education, Inc. (AEI) has signed a share purchase agreement to buy around 96% of NTC, after it was selected as the winning bidder for the tender offer of the company’s stocks.

Founded in 1928 in Quiapo, Manila, NTC specializes in teacher education, and was the first to offer general education courses up to the Bachelor of Science in Education program. The school’s student population currently stands at over 10,000, around 3,500 of whom are taking up education as a degree and at the graduate level.

NTC has a Level III accreditation from the Philippine Association of Colleges and Universities Commission Accreditation, which recognizes the school’s quality standards for its elementary and secondary education programs.

“We believe that NTC can play an integral role in our efforts to contribute to a better education system in the Philippines, because of NTC’s long and successful track record in producing quality educators who go on to teach in both public and private schools,” AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala said in a statement.

For its part, NTC Chairman Rolando de Castro said the partnership with the Ayala group will help the school move forward with its vision to become a world-class institution.

“In selecting the buyer who shall acquire the shares of NTC, it was important to look not only at the capability to expand the school’s horizons, but also at the alignment of values and vision for raising our Filipino youth,” AC quoted Mr. De Castro as saying.

AEI currently operates the largest chain of stand-alone private high schools through Affordable Private Education Center (APEC) Schools, accommodating 16,000 students across 23 locations in Metro Manila, Cavite, Rizal and Batangas. The company also controls University of Nueva Caceres in Naga City with 8,000 students, and is one of the oldest private schools in the Bicol region.

With the acquisition of NTC, AEI’s schools will have a total student population of around 34,000.

AC has beefing up its education portfolio, disclosing at the start of the month negotiations to merge AEI with iPeople, Inc., which has under its network Mapua University, Malayan Colleges Laguna and Malayan Colleges Mindanao.

“We are committed to investing in further quality at NTC, and building on its traditions of excellence and inclusiveness… We believe that NTC will be a key strategic element in the merger we have proposed between AC Education and iPeople,” AEI Chief Executive Officer Alfredo I. Ayala said in a statement.

The Ayala and Yuchengco groups said they will complete due diligence for the proposed transaction by the first quarter of 2018. Should the merger push through, iPeople will be the surviving entity, and will cover the whole spectrum of the education cycle.

AC’s attributable profit grew by 18% to P23.2 billion in the first three quarters of 2017, following a 21% uptick in revenues to P170 billion.

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