AGI Earmarks PhP240B for Capex Up to 2020
Alliance Global Group Inc. (PSE: AGI), the investment holding company of billionaire Dr. Andrew L. Tan, has announced a three-year capital expenditure (CAPEX) of PhP240 billion up to 2020 to ensure its organic growth.
AGI’s CAPEX is intended to launch more development projects around the country, further increase its leasing capacities for its office buildings and lifestyle malls, expand land banking as well as hotel and integrated resorts operations, and to increase the number of McDonalds stores nationwide, in addition to funding maintenance CAPEX.
“We are mindful of the current domestic and global economic developments, but we remain cognizant of the vast opportunities in the market; hence, our continued aggressive capital spending,” says Kevin L. Tan, chief executive officer, AGI.
During the 10 ten years, AGI has allocated around PhP470-billion in CAPEX, of which about 80% was spent over the last five years as it embarked on an ambitious expansion program.
During the said period, AGI’s property arm, Megaworld Corp. (PSE: MEG), launched around PhP200 billion worth of residential projects, and added 800,000 square meters in gross leasable area for its office and lifestyle malls businesses.
AGI’s spirits subsidiary, Emperador Inc. (PSE: EMP), on the other hand, acquired Scotland-based Whyte and Mackay (2014), Bodegas Fundador of Spain (2016) as well as the Pedro Domecq brands of Mexico (2017).
Travellers International Hotel Group Inc. (PSE: RWM), the operator of Resorts World Manila (RWM), completed its RWM Phase 2 expansion, and launched the Marriott Hotel West Wing and the Marriott Grand Ballroom. It also pursued Phase 3 of its expansion program which will add new international hotel brands Hilton, Sheraton and Okura, as well as the Grand Wing casino.
Meanwhile, Golden Arches Development Corp. opened over 200 McDonalds stores throughout the country during the last five years.
Moving forward, AGI’s PhP240 billion capex will be utilized to further expand and future-proof its businesses to sustain the Group’s long-term growth.
Its newly-formed subsidiary, Infracorp Development Inc., is set to undertake rail infrastructure projects that are aimed at helping the government provide world-class public transport system to promote efficient movement of the riding public across Metro Manila. In a few months, it is looking to start the construction of its first project, the 2-kilometer Skytrain monorial system, which will link Taguig City to Makati City.
Infracorp, through parent AGI, is also a party to the mega-consortium that proposed to rehabilitate and upgrade the existing Ninoy Aquino International Airport. The PhP102-billion project, which just recently secured an original proponent status, is looking to start the airport modernization work as early as middle of next year.
Megaworld, for its part, is incorporating digital technology, design innovations and connectivity to develop its iTownships of the future. By 2020, it is also looking to grow its office and mall gross leasable area to two million square meters as it targets to bring its rental income to PhP20 billion.
The expansion of its investment properties includes build-to-suit office towers for US-based companies JPMorgan Chase Bank and Factset, with combined footprint of 120,000 square meters, as well as the completion of Festive Walk Mall in Iloilo Business Park and several community malls within its townships.
AGI, through Travellers and Megaworld, is also aggressively expanding its hotel portfolio with the objective of bringing its total room capacity to 12,000 keys in the next few years, in support of the government’s thrust to reach its 10 million tourist arrivals target by 2020.
Golden Arches, likewise, will continue to pursue its store expansion program, adding one McDonalds store each week in more cities throughout the Philippines.
As for Emperador, it is looking to further expand its portfolio of domestic and international liquor brands through more product introductions, like Shackleton, Terry White, Fundador Double Light, and The Dalmore 50 for the international market, as well as Hotshots, Emperador Red and its gin product The Bar, for the domestic market.
Emperador also aims to intensify its global presence, using Whyte and Mackay’s route-to-market network in 102 countries, targeting mainly the markets in Asia, North America, United Kingdom, Europe and the Middle East, as well as through Travel Retail.
“The bulk of our planned capex will be funded internally, leaving only a small portion that will need bank financing. Be assured though that we will always maintain financial prudence and keep our gearing at reasonable level,” adds Tan.
As of end-June 2018, AGI’s net debt-to-equity at the consolidated level stood at 38% versus 41% in 2017.