DIVERSIFIED conglomerate Ayala Corp. is targeting to divest some assets and raise $1 billion by 2023 to fund future investments and to enhance core businesses in real estate, banking, telecommunications, and energy.

“Through 2023, we have committed to sharpen our portfolio with an increased focus on value realization to fund future investments and strengthen our balance sheet, targeting to raise $1 billion in proceeds by 2023,” Ayala President Fernando Zobel de Ayala said in a virtual meeting on Friday.

For 2022, Ayala is setting aside P285 billion for capital expenditure projects across its businesses, or an increase from its P196-billion budget last year.

“We have a renewed focus on sharpening our portfolio, taking into account the changes in the business landscape. We are working towards achieving a robust and agile portfolio that can deliver optimal returns across its components,” Mr. Zobel de Ayala said.

He said the move will be executed through “a combination of strategic partnerships and divestments of assets that are no longer strategic to our portfolio or do not meet the desired scale and profitability.”

As of March 2022, the company said it realized 61% or $614 million from the transactions through its energy arm, a follow-on offering, and from Manila Water Co., Inc., and through the sale of secondary shares to the Razon group, among other transactions.

“We have also executed a property-for-share swap with Ayala Land, which involved transferring five of our assets to Ayala Land in exchange of its primary common shares. Further, we have started the divestment of some of our passive investments in AC Ventures [Holding Corp.], which is an ongoing exercise,” he said.

The company also divested its entire stake in the Muntinlupa-Cavite Expressway Project to the Villar group.

To reach the remainder of the $1-billion target, Ayala will be working on divesting its remaining thermal assets, interest in the LRT-1, and some of its other non-core businesses.

“We have so far reinvested around $360 million of the value realization proceeds into value-accretive opportunities. Since last year, we have been taking advantage of attractive valuations to buy back Ayala and Ayala Land, Inc. shares,” Mr. Zobel de Ayala said.

“Going forward, proceeds will be redeployed to fund other investments and pay down debt. We hope to improve our gearing level and evaluate our dividend payout in step with the growth of our businesses,” he added.

In 2021, Ayala recorded a P27.8 billion net income, up 62.6% from P17.1 billion in 2020.

“We have seen most of our businesses performing better in our second year into the pandemic. Ayala Land, the Bank of the Philippines Islands (BPI), Globe Telecom, Inc., and AC Energy Corp. (ACEN) continued to be the core drivers of our earnings,” Mr. Zobel de Ayala said.

“Despite limited mobility,  Ayala Land was able to capture the fairly resilient demand in its residential business and stable office leasing segment,” he added.

In 2021, Ayala Land’s net income rose by 40% to P12.2 billion.

The property developer has more than 12,000 hectares of land bank and focuses mainly on large-scale, integrated, mixed-use, and sustainable estates.

“Following the success of the Makati Central Business District, Ayala Alabang, Cebu Park District, Bonifacio Global City, and NUVALI, Ayala Land pioneers sustainability standards and practices in all of its developments and acts with integrity, foresight, and prudence as a responsible corporate citizen,” Mr. Zobel de Ayala said.

The company also achieved 100% carbon neutrality for its malls, offices, hotels, and resorts last year, subject to third-party verification in 2022.

Meanwhile, BPI reported a 12% increase in earnings were to P23.9 billion.

Mr. Zobel de Ayala said the bank views 2022 to be a recovery year due to elevated global and domestic inflation, he also said to expect higher interest rates.

“With higher interest rates expected to take place in the second semester, BPI sees an expansion in net interest margin of 15 to 20 basis points,” he said.

“We expect the bank’s loan growth to improve from the 5% posted in 2021 to around 7 to 10%in 2022. This will be driven by strong growth across credit card and personal loans, microfinance, and corporate loans. On nonperforming loans, BPI expects benign formation from the current 2.5% to a maximum of 3% NPL ratio,” he added.

The bank has 1,176 branches of BPI, BPI Family Savings Bank, and BPI Direct BanKo.

“BPI normalized its loan loss provisions as asset quality improved. In addition, it continued to leverage its digital leadership in banking, rapidly growing its digital ecosystem,” he added.

Ayala’s energy platform ACEN reported that profits increased by 22% to P5.3 billion in 2021.

It has 3,751 megawatts (MW) in total pro forma attributable capacity as of end-March 2022, of which approximately 3,300 MW or 87% is from renewable energy sources, mostly in solar and wind technologies, with some geothermal and battery storage assets.

As of the first quarter of 2022, 63% of ACEN’s assets are already operating, while 37% are under construction.

ACEN’s robust capacity platform puts it in a strong position to reach its 5,000-MW renewable energy target by 2025 even earlier, towards its vision of becoming the largest listed renewables platform in Southeast Asia.

Meanwhile, telecom giant Globe’s net income grew 27% to P23.7 billion.

The company has nearly 1 million AutoloadMax retailers, distributors, and business partners nationwide and services 86.8 million mobile subscribers, including fully mobile broadband,  and 3.7 million Home Broadband customers.

“Globe has been able to build up GCash to reach significant scale and financial sustainability. At the same time, Globe is transforming itself into a digital solutions platform by providing products and services beyond traditional telecom services to address the evolving needs of consumers and enterprises,” Mr. Zobel de Ayala said.

Ayala said it will also be scaling up its emerging businesses Ayala Healthcare Holdings, Inc. and and AC Logistics Holdings Corp. to create “new sources of growth and value” and focus on enhancing its portfolio investments, including AC Industrial Technology Holdings, Inc., Manila Water, AC Infrastructure Holdings Corp., and AC Ventures.

At the stock exchange on Friday, Ayala shares went up by 0.75% or P5.50 to close at P737.50 apiece. — Luisa Maria Jacinta C. Jocson