Ayala eyes 2-digit return on $300-M infra, power assets

MANILA, Philippines - Ayala Corp. (AC), the country’s oldest conglomerate, expects its power and infrastructure businesses to start contributing profits next year.

The $300 million worth of power generation plants and infrastructure assets being put up by the conglomerate will yield double-digit return on equity annually, an executive said.

“We will start seeing meaningful contribution by next year,” John Eric Francia, managing director and head of corporate strategy of AC, said in an interview.

“All of these plants we’re going to operate is almost $300 million worth of equity already,” Francia said, adding that the conglomerate expects a double-digit return on equity annually from the new businesses.

“Double-digit is our target,” Francia said. At a 10-percent return, AC stands to post a $30-million gain every year when the new projects start operations.

AC operates its power and infrastructure businesses through AC Energy Holdings Inc. and AC Infrastructure Holdings Corp., respectively.

Specifically, AC Infrastructure will complete the construction of the P2-billion Daang Hari South Luzon Expressway late this year, Francia said.

AC also partnered with Pangilinan-led Metro Pacific Investments Corp. for the P1.72-billion single ticketing project for the Metro Rail Transit and Light Rail Transit (LRT).

“Other than that, it’s power generation,” Francia said.

For instance, the 600-megawatt (MW) coal-fired power facility of GNPower Mariveles Coal Plant Ltd Co. (GMPC) in Bataan will come online this year. AC last year acquired 17 percent of GMCP.

The first 135-MW unit of South Luzon Thermal Energy Corp. (SLTEC) power plant in Batangas will be completed by the end of the year. SLTEC is a joint venture of Trans-Asia Oil and Energy Development Corp. and the AC Energy.

For wind projects, Francia said the 81-MW project of North Luzon Renewable Energy Corp. in Ilocos Norte will also start commercial operations this year.

“In terms of the power projects we’re starting, there’s a small hydropower project in the north, around 11 MW,” Francia said.

AC also finalized its plan to invest in electricity-starved Mindanao with the construction of three to four 135-MW units of coal-fired power plant in the middle of this year, Francia said.

In 2011, the conglomerate announced its entry into the power generation business. It acquired a 50-percent stake in NorthWind Power Development Corp. that owns and operates the 33-MW wind farm in Bangui Bay in Ilocos Norte for P500 million.