AC Energy acquires Phinma Corp. power unit for P3.42 billion

MANILA, Philippines — AC Energy Inc., the energy platform of the Ayala conglomerate, is acquiring the Phinma Group’s power business in a deal that will allow both parties to focus and meet targets in their respective core competencies.

In separate disclosures yesterday, Ayala Corp. and Phinma Corp. announced the signing of the heads of agreement to sell the latter’s shares in Phinma Energy Corp. (PHEN) to AC Energy.

Under the agreement, AC Energy will acquire the combined 51.48 percent stake of Phinma Corp. and Philippine Investment Management Inc. (PHI) in PHEN through a secondary share sale amounting to P3.42 billion.

Both parties said the closing of the transaction is subject to regulatory approvals from the Philippine Competition Commission (PCC), Securities and Exchange Commission (SEC) and Philippine Stock Exchange (PSE), and compliance with the mandatory tender offer requirements.

Apart from the secondary share sale, AC Energy will also subscribe to the 2.63 billion shares to be issued by PHI and Phinma.

Upon closing of the transaction, AC Energy will end up owning 68.46 percent of PHEN.

According to Phinma, the sale is a timely opportunity to harness value from a business which it established 50 years ago and which the listed holding company believes it has grown to the extent it can.

The Phinma Group, however, will focus more on meaningful expansions in other sectors such as education and construction materials, which is why it decided to sell its power business to AC Energy.

“Phinma and Ayala have always enjoyed a strong partnership, making this agreement a truly welcome culmination of our joint initiatives in the energy sector, as we believe AC Energy is best- positioned to grow the business and take it to the next level.

This strategic move likewise allows Phinma to focus on our rapidly expanding investments and operations in the education and construction materials sectors,” Phinma president and chief executive officer Ramon del Rosario Jr. said.

It was in 2011 when AC Energy and PHEN partnered for the development, construction and operations of a 244-megawatt (MW) coal power plant in Calaca, Batangas under South Luzon Thermal Energy Corp. (SLTEC).

“PHINMA was one of our early partners when Ayala was new to the power sector. This partnership has prospered over the last eight years and we welcome the opportunity to now integrate Phinma Energy into AC Energy’s platform as we grow our presence in the power generation sector,” Ayala Corp. chairman and chief executive officer Jaime Augusto Zobel de Ayala said.

As for the Ayala Group, the acquisition of PHEN will boost its renewable energy (RE) capacity as well as provide necessary support for the intermittency of its RE portfolio.

AC Energy president and chief executive officer Eric Francia said the transaction is an important step for AC Energy to achieve five gigawatts (GW) of renewables by 2025.

“The Phinma Energy platform has significant operating and developmental renewable energy assets, and its large diesel capacity will complement the scaling-up of our renewable projects,” he said.

PHEN has an attributable generation capacity of 472 MW and is the third largest retail electricity supplier, serving 378 MW of customer demand.

It wholly owns Phinma Power Generation Corp., Phinma Renewable Energy Corp., CIP II Power Corp., One Subic Power Generation Corp. and One Subic Oil Distribution Corp.

PHEN also owns 60 percent of Phinma Solar Corp., 50.74 percent of Phinma Petroleum and Geothermal Inc., 30.65 percent of Palawan Exploration and Production Corp., 45 percent of SLTEC and 25 percent of Maibarara Geothermal Inc.

Meanwhile, AC Energy, based on its equity interest in power generation businesses, owns approximately 1.7 GW of generation capacity in operations and under construction.

Last year, it generated 2,800 gigawatt-hours of energy, of which 48 percent was from renewable sources.