The surge in merger and acquisition (M&A) activity in the Philippines signals a pivotal shift in the energy landscape, driven by a combination of green energy initiatives and a robust infrastructure development agenda. The latest report from PwC Philippines reveals a staggering 29.9-percent increase in M&A deals for 2024, with the total number of transactions jumping from 87 in 2023 to 113 last year. This uptick is not just a number; it represents a growing recognition of the Philippines as a fertile ground for investment, particularly in the energy sector, which accounted for 18.6 percent of the total deal volume.
At the heart of this transformation lies the country’s commitment to renewable energy. The energy and natural resources sector alone saw M&A deals worth $3.7 billion across 21 significant transactions in 2024. Notably, the acquisition of multiple power plants by Meralco PowerGen Corp. and Aboitiz Power Corp. for $2.2 billion highlights the urgent need to bolster generation capacity to meet rising energy demands. This isn’t just about keeping the lights on; it’s about laying the groundwork for a sustainable future that aligns with global trends towards decarbonization.
The regulatory environment has played a crucial role in this momentum. The introduction of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act has paved the way for tax incentives that are luring foreign investors into the energy and telecommunications sectors. This strategic shift in policy aims to enhance the country’s appeal as a destination for capital, and it’s working. The CREATE MORE (Maximize Opportunities for Reinvigorating the Economy) Act, signed in late 2024, is another feather in the cap for policymakers, promising to further stimulate M&A activity and foreign participation across various sectors.
As the Philippines positions itself as a hotbed for M&A, sectors such as technology, financial services, and real estate are also witnessing significant activity. The push for digitization in financial services, driven by the Bangko Sentral ng Pilipinas’ initiative to digitize 50 percent of transactions by this year, has resulted in 17 M&A deals worth $908.2 million. The collaboration between Globe FinTech Innovation Inc. and Japan’s Mitsubishi UFJ Financial Group to bolster e-wallet GCash exemplifies the innovative spirit permeating the sector.
Looking ahead, experts like Juan Paolo Colet from China Bank Capital Corp. foresee a continuation of this trend, fueled by a favorable economic outlook and a demographic profile that attracts investment. Michael Ricafort from Rizal Commercial Banking Corp. echoes this sentiment, noting that the Philippines is among the fastest-growing economies in ASEAN. However, he underscores the need for the government to address high electricity costs and fully leverage the CREATE MORE Act to maximize job-generating investments.
In a world where energy transition is not just a buzzword but a necessity, the Philippines stands at a crossroads. The interplay of regulatory reforms, investor confidence, and a commitment to renewable energy could very well define the country’s economic trajectory in the coming years. As the M&A landscape continues to evolve, it will be fascinating to watch how these developments shape not only the energy sector but the broader economic fabric of the Philippines. The future is bright, and the stakes are high.
