AEV moves to reassure investors on JERA deal

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ABOITIZ Equity Ventures, Inc. (AEV) and its core business Aboitiz Power Corp. saw their share prices slump on Tuesday, a day after the listed holding firm announced that it was selling a 25.01% stake in its energy arm.

AEV was quick to justify the move, which it said would open opportunities and financial support for its other businesses while providing “learning” with the entry of Japan-based energy firm JERA Co., Inc.

“The real goal here is not to reduce [AEV’s exposure to coal, thermal, and renewables] by selling AP [shares],” AEV Senior Vice-President and Chief Financial Officer Manuel R. Lozano said, referring to the stock symbol of AboitizPower.

“The goal here is to also provide us the ammunition to grow our other business units, from infra to banking, food, and also to bring in a very strong partner for AP,” he told reporters in a briefing on Tuesday.

AEV shares at the stock market declined by 10.55% or P5.60 to close at P47.50 apiece, while AboitizPower shares lost 9.65% or P3.30 to end at P30.90 each on Tuesday.

On Monday, AEV announced that it was planning to sell 1,840,334,941 common shares or about a quarter of the AboitizPower shares to JERA for $1.463 billion.

Meanwhile, the Aboitiz family’s privately owned parent company will sell an additional 1.99% stake to JERA to allow the Japanese firm to comply with its own requirements.

Following the completion of the transaction, AEV will still own 52% of AboitizPower, while JERA will own 27%.

AEV said the transaction grants the company “optionality.” The company said it was looking to use proceeds from the AboitizPower share sale to grow its other business units or to refinance existing debt.

“I have assured our team members that there will be no work force rationalization as a result of this partnership,” AEV President and Chief Executive Officer Sabin M. Aboitiz said.

“On the contrary, this transaction will open the doors for more opportunities for employment, for growth, and for learning as it will help push us forward towards expanding our business and strengthening our competencies,” he added.

AboitizPower President and Chief Executive Emmanuel V. Rubio said the deal would not trigger a change in management. JERA may nominate two of the 11 members of the board of directors.

“Through this partnership, we hope to build on our 10-year plan where we aim to reduce the carbon intensity of our business,” said Mr. Rubio. “We intend to explore pathways toward decarbonization that will complement our renewable energy growth plan and our nature-based carbon sequestration program.”

AboitizPower will be working on developing more renewable projects in its portfolio with the help of JERA’s expertise and the technologies it is looking at, such as CO2 (carbon dioxide) absorption, green hydrogen, among others.

Meanwhile, AEV aims to continue diversifying its business, with AboitizPower “still being the core.”

In April, AboitizPower said it was looking at building 3,900 megawatts of renewable energy in about a decade to achieve an equal share of renewables and thermal energy in its portfolio. It later said that it was considering a budget of P190 billion to build the target renewables capacity.

In the first half, AEV reported a net income of P13.5 billion, more than three times higher year on year. Its power business accounted for 53% of the total income contributions from its units during the period. — Keren Concepcion G. Valmonte