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ADB, IFC invest in Ayala energy unit’s green bonds

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By Victor V. Saulon, Sub-editor

AC Energy, Inc. has attracted two of the world’s biggest development lenders International Finance Corp. (IFC) and the Asian Development Bank (ADB) to the Ayala-led company’s multi-million dollar green bond offering that will fund regional renewable energy projects, company officials said.

“In total now, we have $410 million from the green bond offer,” Eric T. Francia, AC Energy president and chief executive officer, told reporters in a briefing on Monday.

The principal amount of AC Energy’s green bonds was initially at $225 million, with a five-year maturity and a coupon of 4.75% per annum, the company said on Jan. 25.

IFC, a sister organization of the World Bank, provided an anchor investment of $75 million, completing the public placement and supporting the raising of a total $300 million from Philippine and international investors.

Separate 10-year bonds amounting to $100 million with a 5.25% coupon were issued through private placement, with ADB as one of the main investors with $20 million.

The initial offering was listed on the Singapore Stock Exchange on Jan. 30. The additional bonds will also be listed on that bourse. The bonds were issued through the company’s wholly owned subsidiary, AC Energy Finance International Ltd., and guaranteed by AC Energy.

“We’re excited about this because this is the first climate bond-certified publicly listed, US-dollar green bond in Southeast Asia. So it’s a first of its kind,” Mr. Francia said.

“Obviously, this will go to fund our renewables expansion both onshore in the Philippines as well as around the region,” he said.

AC Energy aims to install 5 gigawatts (GW) of energy capacity by 2025, with renewables accounting for at least 50% of its total energy output. It has generated 2,800 GWh of attributable energy last year, of which 48% was from renewable resources.

“[The bond issuance] is particularly meaningful to us because of the strong support of these multilateral development institutions. It shows the confidence in our ability to really develop renewables across the region,” Mr. Francia said.

In a statement, AC Energy quoted IFC Director for East Asia and the Pacific Vivek Pathak as saying that the group was proud to support Ayala “in greening its power generation portfolio by helping fund its aggressive growth in renewable energy.”

“We are delighted that our partnership, leveraging IFC’s extensive global experience in green bonds, successfully mobilized substantial international investment in the public placement of the company’s” five-year bond, he said.

“This demonstrates the excellent potential of the green bond asset class as a tool for mobilizing international institutional capital into infrastructure assets, and we look forward to expanding our support of such issuances across Asia, advancing the integration of regional power and financial markets,” he added.

Michael Barrow, director general of ADB’s private sector operations department, said the green bond will “contribute to ASEAN’s target of drawing 23% of its energy mix from modern, clean, and sustainable renewable sources by 2025.”

AC Energy has been selling some of its thermal assets, while increasing its investments in renewable energy.

In April 2017, the company and its joint venture partners completed the acquisition of Chevron Corp.’s geothermal assets and operations in Indonesia, further boosting AC Energy’s renewable energy portfolio in that country after earlier investing in a wind farm.

In September last year, it announced Aboitiz Power Corp.’s acquisition of a 49% voting stake and 60% economic stake in AA Thermal, Inc., AC Energy’s thermal platform in the Philippines.

In November, its international unit invested in Singapore-based renewable energy company The Blue Circle Pte. Ltd. through a 25% ownership acquisition as well as co-investment rights in the latter’s projects. They are to jointly develop around 1,500 megawatts (MW) of wind projects across Southeast Asia, including about 700 MW in Vietnam.

In January this year, AC Energy said it was investing in Phinma Energy Corp. through a “mutually strategic agreement” that gives the Ayala energy arm a 51.48% stake in the listed energy company with ownership stake in solar, wind and geothermal energy projects.