The Philippines has seen remarkable growth in mergers and acquisitions (M&A) in 2024, particularly within the energy and natural resources sector, which has demonstrated the highest transaction value. A recent report from PwC Philippines reveals the sector completed 21 out of 113 M&A transactions this year, amounting to $8.6 billion, reflecting strong investor interest.
Among the standout acquisitions was Aboitiz Corporation’s impressive $2.2 billion purchase of multiple power stations. This acquisition is set against the backdrop of the Philippines' increasing demand for clean energy solutions, as the country aims to produce 4,600 megawatts (MW) of renewable energy by 2030. Aboitiz Renewables Inc. President Jimmy Villaroman emphasized the company's commitment, stating, "Aboitiz remains on track to achieve its six-month target of 176 MW of renewable energy in 2024." This demand growth is projected at 6.6 percent annually until 2040.
According to PwC, "The year 2024 was a promising period for M&A in the Philippines, fueled by progressive investment policies and strong performances in key industries." The report notes significant M&A activity not only within energy but also across financial services, technology, and consumer and retail sectors, which collectively accounted for 38.1 percent of the transactions.
The increase in M&A activity can largely be attributed to recent reforms implemented by the Department of Energy. These include the Green Energy Auction Program, which has streamlined bidding processes, and the Philippine Energy Plan aimed at modernizing the power sector. Both developments are paving the way for increased foreign investment and participation.
Further supporting this growth is the CREATE MORE Act (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorated Economy), which has successfully lowered corporate income tax rates for registered business enterprises from 25 percent to 20 percent. This policy has made the investment climate even more attractive for foreign and local investors.
Documenting the trend, annual M&A deals surged from 87 transactions in 2023 to 113 this year, showcasing the Philippines as a major player on the regional investment front. PwC Philippines added, "The country continues to show potential in integrating artificial intelligence across various industries, with organizations expressing interest in these technologies," highlighting how this digital shift could bolster future M&A prospects.
The underlying factors for the success of M&Os this year stem not only from market policies but also from the overall resilience of the Philippine economy following the challenges posed by the global pandemic. Investors are increasingly recognizing the country's strategic position as it moves toward more sustainable energy sources and innovative technologies.
With the transition to cleaner energy and the embracing of new technologies, the Philippine M&A market is primed for continued growth. Observers are optimistic about future trends as the government and private sector align their efforts toward sustainability and economic reinvigoration.
2024 has undoubtedly marked itself as a pivotal year for mergers and acquisitions within the Philippines, presenting unprecedented opportunities for investors eager to engage with the nation's thriving economy. With regulatory frameworks supportive of growth, and sectors poised for transformation, the stage is set for the country to attract more significant investments and partnerships moving forward.