AEV remains dynamic

My early coverage of the Aboitiz Group was in the early 1980s as a trade/energy reporter.

At that time, the Aboitiz family’s core business was in shipping through the Aboitiz Shipping Co. and power in the Visayas region through the Visayan Electric Company (VECO) and in Mindanao through the Davao Light and Power Co. I, thus, had the opportunity to visit Cebu and Davao to see the group’s various power projects at that time.

The Aboitiz Group was still based in Cebu, and in the Philippine business sector, was considered to be the provincial counterpart of the powerful Manila-based Ayala Group, the Sorianos who then owned San Miguel Corp. and the Cojuangco family who then controlled the PLDT monopoly.

When I was subsequently assigned to the banking beat, the Aboitiz Group had started to venture into financial services and was a member of the consortium that included the government’s Social Security System (SSS) and Insular Life, which took over Union Bank Savings Bank. UnionBank eventually got its license to operate as a commercial bank in 1982, and became a universal bank by 1992.

My next coverage of the Aboitiz Group was when I was moved to the agriculture and environment beat and I again had the opportunity to visit and observe the flour operations of Pilmico Foods Corp., which is now part of Aboitiz Foods. Pilmico has since expanded into animal nutrition and has ventured into Vietnam and eyes a possible expansion to Malaysia.

Jon Ramon Aboitiz was then the president and CEO of Aboitiz & Co. from 1991 to 2008 and concurrent president of Aboitiz Equity Ventures from 1994 to 2008, which is now the holding company of the family’s core business that includes power, food, financial services real estate and infrastructure.

By the time Erramon “Montxu” Aboitiz took over the role as president and CEO of AEV in January 2009 and retired in December 2019, the Aboitiz Group was no longer considered a provincial cousin. It had managed to quietly transform itself into a conglomerate player that has taken its rightful place in the Philippine business community.

Thus, when Sabin Aboitiz formally took over the management of AEV from older brother Montxu in January 2020, AEV unleashed its formidable strength and ventured further into infrastructure and estate development, acquiring a majority in the company that operates the Mactan-Cebu International Airport and bidding for other airport projects such as the Laguindingan International airport and the New Bohol-Panglao International Airport.

Thus, AEV now has now become a major business power player with various investments in aviation, insurance and international ventures in Vietnam, Malaysia and Indonesia.

Sabin Aboitiz has astutely played the political game, betting early on Ferdinand Marcos who eventually became president. Sabin’s friendship with the President is such that he was appointed to head the Private Sector Advisory Council or PSAC which is composed of the country’s tycoons and offers economic guidance to President Marcos.

During its media briefing last Monday after its Annual Stockholders’ Meeting, AEV CFO Jose Emmanuel Hilado announced that the conglomerate is increasing by 37 percent its capital outlay for 2025 to P105 billion.

Funding of the P105 billion capex program, Hilado said, is still being studied due to uncertainty over the movement of interest rates. Most likely, he said, funding would be secured through a combination of loans and bonds, assuring that “we will maximize what is cheapest for us.” Thus, AEV will still carefully study the timing of it planned borrowings.

The bulk of the increased capex for this year, according to Hilado, would be given to AboitizPower to build up its renewable power and distribution capacity.

AboitizPower president and CEO Danel Aboitiz (who is married to Mariana Zobel), for his part, said that the power arm has set a capex of P78 billion for 2025 as it sees opportunities to expand in solar, hydro, geothermal and wind as part of its low carbon strategy. He also pointed out AboitizPower accounted for 80 percent of AEV’s EBITDA or earning before interest, taxes, depreciation and amortization.

The second biggest allocation, Hilado said, would go to Aboitiz InfraCapital for its economic estate developments and tower acquisitions.

According to Cosette Canilao, president and CEO of the infrastructure arm of the Aboitiz Group, the capex allocation would be used to increase the passenger capacity and upgrade the operations of Laguindingan airport, as well as that of the Panglao airport once the group takes over operations and maintenance by June this year.

Aboitiz Land likewise continues to take bold strides in its various real estate projects and subdivisions alongside the development of Aboitiz InfraCapital’s economic estate development in Central Luzon, more precisely the Lima Estate in Malvar, Batangas and the Tari Estate in Tarlac City, Tarlac.

AEV’s banking arm UnionBank would be third in line in terms of total capex allocation to build up its digital infrastructure. Ana Aboitiz-Delgado, president and CEO of UnionBank, talked about the bank’s use of artificial intelligence which has already resulted in real time processing of credit card applications, resulting in 10 times growth in credit cards.

Aboitiz Foods would be fourth in line for capex allocation. According to Tristan Aboitiz, president and CEO of Aboitiz Foods, it needs to refurbish its farms and repopulate its production. Likewise, the food arm is also studying a possible feedmill investment in Malaysia. Aboitiz Foods had previously invested $45 million in a feed mill in Vietnam and also in a small mill in China.

With the Aboitiz Group’s young and bold leadership team, under the politically savvy guidance of Sabin, the once provincial player is now indeed a powerful and dynamic player in the Philippine business sector.