Philippines’ Ayala eyes investment deals as it recycles capital

AYALA, the oldest Philippine conglomerate, is looking to complete within a year the reinvestment of US$1 billion of its capital into emerging businesses, banking on continued expansion in the South-east Asian economy.

The company, which has interests in banking, property, energy and telecommunications, committed about three years ago to recycle about US$1 billion in capital, of which more than 60 per cent has been deployed as of last year, president and CEO Cezar Consing said on Monday (May 29).

The company hopes to reinvest the remaining amount in a year, he said.

“We have irons in the fire,” Consing told reporters. “It’s basically recycling capital to where there are more immediate opportunities,” he said after the conglomerate listed its preferred shares on the Philippine bourse.

Supported by pent-up demand, the Philippine economy expanded 6.4 per cent in the first quarter of 2023 from a year ago.

While that is slower than the 7.6 per cent full-year growth last year – the fastest in almost half a century – the South-east Asian nation is poised to remain a bright spot in a world facing growth risks from rising borrowing costs.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

Asset valuations took a hit when interest rates suddenly rose globally. “I suspect valuations will begin to recover when interest rates steady,” Consing said.

The deals that could emerge from capital recycling may be a combination of big and smaller assets. He reiterated Ayala’s plans to increase investments in health and logistics, while core businesses will reinvest capital.

Ayala previously announced a planned divestment of its Light Rail Transit Line 1 shares as part of a broader sale of non-core assets, and it remains open to it.

“Frankly, under current conditions, we’d prefer to be opportunistic,” Consing said.

The group may also consider raising funds this year, depending on market opportunity, that may be used for 2024, chief financial officer Alberto de Larrazabal said, adding that Ayala has some debts that will fall due in the third quarter.

“We normally assess what are the most competitive instruments. It could be bonds; it could be even bilaterals,” he said. BLOOMBERG