October 22, 2013

AEV to raise P10b via bond sale

In a disclosure, Aboitiz Equity Ventures Inc said it recently filed an application with the Securities and Exchange Commission to sell P10 billion worth of retail bonds.

Although the coupon rates have yet to be set, the bonds will carry seven- and 10-year maturities. The company intends to raise the funds by November.

Our take: AEV is among the conglomerates with low gearing levels. As of end-June, parent net D/E stood at only 0.01x relative to the sector's 0.12x. Raising P10b will allow it to replenish its cash pile after it acquired the 60% stake of Alsons Land Corp in Lima Land Inc for P1.36b.

It should likewise prepare the company for any new acquisition or project bid to expand its portfolio without necessarily straining its balance sheet. While the bulk of its value is derived from the power business, AEV has in recent quarters folded in its property development business and is looking at to bid for PPP projects as well. - WealthSec