September 04, 2015

Ayala Corp sells part of stake in wind project

Ayala Corp (AC) disclosed yesterday that its wholly-owned subsidiary Ayala International Holdings Ltd sold its ownership interest in Luzon Wind Energy Holdings BV (Luzon Wind) to DGA NLREC BV, a wholly-owned subsidiary of Mitsubishi Corporation of Japan.

AC did not disclose the value of the transaction. Mitsubishi Corp has been a partner of AC since 1974 and currently holds a 10.2% stake in the conglomerate. Luzon Wind owns part of AC’s stake in North Luzon Renewable Energy Corp (NLREC), being held by its wholly-owned subsidiary AC Energy Holdings Inc (AC Energy). NLREC owns and operates an 81MW wind farm in Pagudpud, Ilocos Norte. Post sale, AC Energy will still remain as the largest owner of NLREC with an economic stake of approximately 36% from 64% previously.

Our take: NLREC is just one of several power project currently owned by AC and accounts for just less than 20% of the conglomerate’s total power generation portfolio (operating) of 277MW. Other power projects include GN Power Mariveles (660 MW coal-fired power plant in Bataan; 20% stake), Northwind Power Development Corp (52 MW wind farm in Ilocos Norte; 50% stake) and South Luzon Thermal Energy Corp (2x135 MW coal-fired power plant in Batangas, 50% stake). By our estimate, AC’s total attributable capacity (operating as of today)will be reduced to 255 MW from 277MW.

AC has so far spent more than US$400m in total equity investments in its power projects and has committed to spend a total of US$700m to ramp up its power generation portfolio. We gathered that total equity investments in NLREC as of end-Dec 2014 amounted to US$110m. This implies a total equity value of ~US$170m. Total project cost is estimated at approximately US$220m. – WealthSec