Ayala prepares sale of railway and energy assets
The conglomerate Ayala Corp. will divest of the remaining thermal power businesses, its stake in Line 1 light rail and other passive investments under AC Ventures, as well as other non-core assets by 2023 as part of a plan to raise $1 billion through asset sales.
Ayala’s chairman and chief executive, Fernando Zobel de Ayala, told the annual shareholders’ meeting on Friday that the conglomerate would use proceeds from the sale of assets to fund future investments, reduce debt and strengthen its balance sheet.
Ayala in March 2022 had completed 61% or $614 million from the sale of assets, including a partial divestiture of Manila Water Co., a stake in GNPower Kauswaganthe and secondary shares in AC Energy to Singapore wealth fund GIC .
The conglomerate reinvested $360 million of the proceeds to buy back shares of the company as well as the real estate unit Ayala Land Inc.
As Ayala sells off some of its non-core assets, it is increasing its investments in emerging companies, AC Health and AC Logistics Holdings Corp., in a bid to develop new revenue streams.
“We aim to establish a meaningful presence in healthcare and logistics, two industries that are undergoing critical transformation,” Zobel said.
He said the two industries are highly fragmented, making them ripe for possible industry consolidation.
The conglomerate has allocated 12 billion pesos to AC Health since 2015 to build a portfolio of assets in primary care and multi-specialty clinics, hospitals, retail pharmacy, pharmaceutical distribution and telehealth.
AC Health, which is currently building the country’s first cancer hospital, is expected to reach profitability this year and close to 1 billion pesos in net income by 2025.
In the field of logistics, the group announced its intention to develop an end-to-end platform to meet the supply chain requirements of various industries.
Ayala signed an agreement in November to acquire a 60% stake in the Air21 group for 6 billion pesos. The deal is expected to be finalized by the first half.
The group hopes the next administration will focus on driving and accelerating the post-pandemic economic recovery by easing the plight of those who have been heavily affected by the pandemic and creating jobs.
“We believe that regardless of the next leader, accelerating economic recovery will be a priority, and we have seen this clearly in our interactions with candidates. Our group has always aligned its strategic priorities with the development agenda. national, and we look forward to working with the next administration,” the conglomerate said.