Aboitiz Weighing Planned IPO For Subsidiary

Aboitiz Power Corp. is evaluating the “premium” it could generate from the planned initial public offering (IPO) of its subsidiary, Aboitiz Renewables Inc. (ARI), which houses the various renewable energy assets of the group.

Photo Insert: There is no definitive timeframe yet for the planned stock listing for ARI.

According to Aboitiz Power Chief Financial Officer Liza Luv T. Montelibano, the main contention being evaluated on the planned stock offering is the premium that the company would be able to fetch from the offering in the local bourse.

“At a point that the price that we can command for our pipe already gives us a premium with a stock price when we go public, it’s trying to see what’s the best window to optimize value from the fact that we have in this existing portfolio,” she said.

There is no definitive timeframe yet for the planned stock listing for ARI, with Montelibano emphasizing that they’re still getting a sense of how the market will input premium on the company once it debuts in the stock market, whether it will be based on having a portfolio of renewables or on the targeted investment growth.

“When it’s valued so well already and you’re doing IPO, there’s timing for that,” the Aboitiz Power executive noted.

At this stage in the company’s planning, Montelibano emphasized that the advantage is there are investors that want pure renewables. “So the investors today, if they want pure renewables, that’s actually the value of ARI,” she said.

Aboitiz Power President and CEO, Emmanuel V. Rubio, said that the other factor being weighed “will be the implications” of ARI’s stock offering to the parent firm given the fact that some of the assets under Aboitiz Power will have to be carved out and will be placed under ARI to drive value for shareholders when its RE business unit will be listed.

Company executives said the operating assets under ARI hover at 1,100 megawatts – including attributable capacity from its SN Aboitiz Power (SNAP) joint venture; plus the assets under its various RE-underpinned subsidiaries, such as AP Renewables Inc. (APRI) for geothermal; Hedcor Inc. for run-of-river hydropower facilities; and the suite of solar investments that the company has been advancing to commercial operations.

The next project pipeline for RE installations cast by the Aboitiz group will be 1,000 megawatts through year 2025, and that will be ramped up to 3,700MW scale by 2030. At least two solar projects – including the 94MW Cayanga venture in Pangasinan and 168MW-peak Laoag solar in Ilocos Norte – will be reaching commercial operations phase by next year; and the other one is the 17MW Tiwi binary geothermal installation in Albay.

“The ability to execute commitments and the value of your pipeline will be covered…the pipeline is something that we are developing,” Rubio stressed.

Carlos Aboitiz, chief corporate services officer of Aboitiz Power, also conveyed that “one of the questions we’re asking ourselves that is not so clear is – if it is a premium to renewable energy or is it a premium to growth. So, it’s hard to separate both.”

He qualified, though, that there are serious matters to be given deeper dive on the evaluation process, “as with everything that is happening now, where energy security is becoming the focus – and where the world is waking up to the fact that renewables is not the silver bullet to a very complex problem…when the world accepts that fact, and they still assign the same premium, then, it’s a good opportunity to wait and see.

Aboitiz asserted “We don’t need to do it (IPO) right now, therefore, it’s a good opportunity to wait and see how the market grows.”

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