Corporate News

By Krista A. M. Montealegre,
National Correspondent

Ayala sets sights on Southeast Asian market

Posted on April 24, 2017

AYALA Corp. is ramping up the regional expansion of its real estate, power and water units, while engaging Chinese firms keen on expanding in the Philippines, as the country’s oldest conglomerate seeks to deepen its presence in businesses that will help address the needs of the country.

Ayala Chairman Jaime Augusto Zobel de Ayala -- BW FILE PHOTO
During the company’s stockholders’ meeting last Friday, Ayala Chairman Jaime Augusto Zobel de Ayala said Southeast Asia remains among the most dynamic growth regions in the world and has remained resilient even in the face of a global economic slowdown.

“While our presence has traditionally been overweighted in the domestic market, we believe that the time is ripe for the Ayala group to begin expanding overseas, particularly in the ASEAN region,” Mr. Zobel said.

To be more specific, Manila Water Company, Inc. is looking at opportunities across ASEAN for its water business, Ayala Land, Inc. is scouting for investments in Malaysia and Indonesia, and AC Energy Holdings, Inc. is considering expanding its presence in Indonesia and Vietnam, Ayala Managing Director Paolo Maximo F. Borromeo said in a separate interview.

AC Industrial Technology Holdings, Inc., the holding firm for its investments in manufacturing and automotive, likewise has identified ASEAN as a core market in most of its business lines.

The Ayala group will pursue the expansion through mergers and acquisitions, and some greenfield ventures, Mr. Borromeo said.

“We’re doing it because there’s a lot of similarity across these countries in terms of needs. Regulations are different, but market factors are similar so you can export your know-how to these countries,” Mr. Borromeo said.

The Ayala group aims to generate a tenth of its equity earnings from its group’s various international investments by 2020 when net profit is expected to reach P50 billion.

With the country’s improving relations with China, the Ayala group has also been approached by Chinese firms interested for partnerships in its real estate and infrastructure businesses, Mr. Zobel said, even as preliminary discussions have yet to progress.

While the conglomerate will see increased regional activity, the Ayala executive said the group is making a deliberate effort to integrate society’s needs into its businesses, developing sectors with “significant gaps in capacity, accessibility, quality, and affordability which are vital engines of broad-based development.”

AC Energy has assembled more than 1,000 megawatts of attributable power generating capacity, contributing to the country’s energy requirements. AC Infrastructure Holdings Corp. is developing road and rail projects and plans to take on more big-ticket developments.

Through its foray into health care and education, Ayala has expanded its reach to the low-income segment with affordable products and services, Mr. Zobel said, noting that AC Industrials aims to generate employment with greater scale.

“These businesses are in their early stages, but we are excited about their growth potential and the impact they are creating to improve lives,” Mr. Zobel said.

Ayala realized a 17% growth in net income to P26.01 billion -- halfway through its 2020 road map -- following a double-digit growth in contributions of its real estate and banking operations.