Ayala goes into power business

Signalling its seriousness to go into the power sector, conglomerate Ayala Corp. has formed Michigan Power Inc. as the corporate vehicle for its proposed power ventures.

In a disclosure to the Philippine Stock Exchange, Ayala said it has already filed with the Securities and Exchange Commission the incorporation papers of Michigan Power.

Ayala is eyeing entry into the power sector through the possible acquisition of some assets of the National Power Corp. (Napocor) that are to be privatized.

Ayala, the oldest business conglomerate in the country, is into real estate and hotels, banking and finance, telecommunications, water distribution, electronics, and insurance, among others.

The Power Sector Assets and Liabilities Management Corp. (PSALM), the agency handling the privatization of Napocor’s power assets, is selling power production and distribution facilities. It has so far sold five hydroelectric and one coal-fired plant, and is working on auctioning the 25-year concession agreement for National Transmission Corp. (TransCo), which has taken over the Napocor transmission assets in preparation for privatization.

The Ayala group is also monitoring developments in the yet-to-be-implemented wholesale electricity spot market to prepare for possible implications on its overall business in the event it enters the power sector.

Ayala Corp. reported a 48 percent growth in its net income in the nine months ending September this year to P5.1 billion, mainly driven by the strong performance of its real estate, banking and water disribution units which offset lower equity earnings from its telecommunications business.

Ayala owns two-thirds of the country’s biggest property firm, Ayala Land, more than a third of the second-biggest lender, Bank of the Philippine Islands, and 35 percent of number two phone firm Globe Telecom.

It also has interests in car dealerships and the Burger King franchise in the Philippines.