Metro Pacific Investments Corporation (MPIC) has partnered with a Singapore-based investment firm to acquire the Philippine Coastal Storage & Pipeline Corporation (PCSPC), the country’s largest petroleum products import terminal.
In a disclosure to the Philippine Stock Exchange, the Manny V. Pangilinan-led firm said MPIC and Keppel Infrastructure Trust (KIT) made the investment through a Sale and Purchase Agreement with the Philippine Investment Alliance for Infrastructure, a ten-year closed-end fund managed by Macquarie Infrastructure and Real Assets.
Under the deal, MPIC will initially hold a 20% stake in Philippine Tank Storage International Holdings, Inc., PCSPC’s parent firm, for a purchase consideration of US$67 million. MPIC and KIT are also discussing whether to give the former an option to increase its interest in PCSPC by up to 50%.
The investment would enable MPIC to diversify its portfolio and revenue streams in a new industry vertical with strong growth potential. PCSPC generates stable cash flows via take-or-pay contracts with high quality off-takers.
“With PCSPC accounting for 36% of the total import terminal storage requirements of the Philippines, MPIC sees this facility as vital energy infrastructure for the country. MPIC and its strategic partner KIT look forward to further expanding the capacity of PCSPC to provide millions of Filipinos with added energy security,” said Pangilinan, who sits as MPIC chairman.
MPIC has controlling interests in the Manila Electric Company (MERALCO), the country’s largest power distributor, and Global Business Power, which generates and distributes electricity in Visayas, Mindanao, and Mindoro. Pangilinan also chairs PXP Energy, which is involved in exploration activities in the West Philippine Sea.
“The strategic acquisition of PCSPC will allow KIT to diversify, grow and strengthen the resilience of KIT’s distributable cash flow. As the largest petroleum products import storage facility in the Philippines, where demand for petroleum products is expected to grow, PCSPC presents an attractive opportunity for KIT to capture opportunities arising from the strong macroeconomic outlook as well as robust growth fundamentals for imported petroleum products in the Philippines,” added KIT CEO Matthew Pollard.
PCSPC would have a storage capacity of approximately six million barrels by the time it completes its expansion in early 2021. Its 150-hectare facility in comprises of 86 storage tanks, two piers and a pipeline infrastructure connecting the entire facility. Located in the Subic Bay Freeport Zone, PCSPC provides clients with a well-connected distribution hub to Central Luzon, Northern Luzon, and Metro Manila — areas with high economic activity in the country.
Photo from PCSPC website.