Philippines’ Ayala Eyes Investment Deals as it Recycles Capital

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(Bloomberg) — Ayala Corp., the oldest Philippine conglomerate, is looking to complete within a year the reinvestment of $1 billion of its capital into emerging businesses, banking on continued expansion in the Southeast Asian economy.

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The company, which has interests in banking, property, energy and telecommunications, committed about three years ago to recycle about $1 billion in capital, of which more than 60% has been deployed as of last year, President and Chief Executive Officer Cezar Consing said on Monday. The company hopes to reinvest the remaining amount in a year, he said.

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“We have irons in the fire,” Consing told reporters. “It’s basically recycling capital to where there are more immediate opportunities,” he said after the conglomerate listed its preferred shares on the Philippine bourse.

Supported by pent-up demand, the Philippine economy expanded 6.4% in the first quarter from a year ago. While that’s slower than the 7.6% full-year growth last year — the fastest in almost half a century — the Southeast Asian nation is poised to remain a bright spot in a world facing growth risks from rising borrowing costs.

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Asset valuations took a hit when interest rates suddenly rose globally. “I suspect valuations will begin to recover when interest rates steady,” Consing said. The deals that could emerge from capital recycling may be a combination of big and smaller assets. He reiterated Ayala’s plans to increase investments in health and logistics while core businesses will reinvest capital.

Ayala previously announced a planned divestment of its Light Rail Transit Line 1 shares as part of a broader sale of non-core assets, and it remains open to it. “Frankly under current conditions, we’d prefer to be opportunistic,” Consing said.

The group may also consider raising funds this year, depending on market opportunity, that may be used for 2024, Chief Financial Officer Alberto de Larrazabal said, adding that Ayala has some debts that will fall due in the third quarter. “We normally assess what are the most competitive instruments. It could be bonds; it could be even bilaterals,” he said.