AC Energy: Southeast Asia’s largest listed renewables company

The growth story of AC Energy could be an edge-of-your seat Netflix series which would be very interesting at least for those really passionate about energy.

It is, therefore, no surprise that during a recent briefing for investors for a P13.1 billion follow-on offer of new shares to be listed on the Philippine Stock Exchange tomorrow, May 14, AC Energy president Eric Francia likened the company’s growth story to a television series with three full seasons and with season four coming soon.

As someone who has covered the energy beat for some time and who has seen energy firms grow or fade into oblivion, I am betting there will be more seasons for AC Energy.

Season 1 (2011 to 2016)

The company started with just a team of five people with no experience in energy.

But Eric Francia’s energy and determination seem unparalleled as he led the five-man team to build what is now touted as Southeast Asia’s largest listed renewable energy company.

From literally zero megawatt, it built up to 1,000 MW during its first five years. Its team has grown to more than 700 people, Eric shared during the briefing.

“Our key strategy was hinged on partnerships. We worked with partners who already had the projects and complemented this with Ayala’s balance sheet, brand and reputation, and management expertise,” he said.

Those years allowed the company to establish a platform, reach adequate scale, and achieve profitability.

Season 2 (2016 to 2019)

But AC Energy’s portfolio, at the time, was mostly coal – the main source of reliable and affordable power then.

However, as costs of renewables dropped, the company shifted to renewables through partnerships outside the country which had more success in the renewables market.

Thus, given the combination of an expanded market across multiple geographies and the perspective that renewables is the way of the future,  AC Energy made its strategic pivot to go regional with focus on RE or renewable energy.

Naturally, it divested from coal plants and recycled the proceeds to expand its renewables portfolio.

Season 3 (2019 to present)

In 2019, when AC Energy acquired PHINMA Energy, it became a listed entity and the sole platform for Ayala Corp.’s energy business.

Thus, a transformation of sorts began and a series of corporate restructuring ensued.

This year, AC Energy marks its 10th anniversary. What a growth story in just 10 years.

It is also now one of the core businesses of Ayala Corp., alongside Ayala Land, BPI, and Globe or the so-called Ayala Big Boys.

War chest

During this time, AC Energy is expected to grow even bigger after raising a lot of capital recently – a whopping $1 billion in green bonds, which made it the largest green bond issuer in the Philippines and one of the largest in Asia.

It is also raising P28 billion in equity this year, including P13 billion from its listing.

What a war chest this would be, enough to fund its bold and ambitious renewable investment goals.

Its specific goal is to have at least five GW of renewable energy capacity by 2025.

This bodes well not only for its investors, but also for the environment.

It’s no surprise that AC Energy has easily become a stock market darling. Its price chart continues to show an upward trend despite occasional dips.

As of this writing, its share price is at P7.32, up 1.95 percent.

Season 4?

What’s next for AC Energy? For now, I can only guess. Perhaps, they will go global and not just regional. So far, no Philippine energy company has gone global in the scale of say, tycoon Enrique Razon’s ICTSI, which is in roughly 30 territories.

Or they can move into the energy storage business and scale up RE in the Philippines.

For sure, RE isn’t easy and once your company has committed to veer away from coal (AC Energy’s target is to have zero coal capacity by 2030), there’s no turning back. There are, of course, other alternatives such as natural gas or liquified natural gas.

Like in any other Netflix series, we can only guess the ending. Some are predictable, some aren’t, and some will keep you wanting for more.

In the case of AC Energy, I’m certain the growth momentum will continue. There’s nowhere to go but further up. RE is a big universe after all and the market is still growing.

Inclusion in major indices

Based on my estimates from previously disclosed company data, once international infusion is completed, its outstanding shares will grow to 38.2 billion and with the FOO price of P6.50 per share, its implied market capitalization will grow to P248.5 billion or about $5 billion.

At this level – if my estimates are correct – the company may be included in major indices such as the PSEi and MSCI.

This, of course, would attract not only ESG investors, but other index funds.

When I congratulated Ayala Corp. president and CEO Fernando Zobel de Ayala on the rosy prospects for AC Energy, he said indeed there’s great momentum and the plans are exciting.

As with one’s favorite Netflix series, one can only keenly wait and see how the next chapter unfolds.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com