Metro Pacific on the lookout for at least 2 logistics acquisitions
MANILA, Philippines – With mom-and-pop stores and big retailers able to launch e-commerce sites relatively easily, a new opportunity arises for the logistics sector to fill their modern supply chain needs. Metro Pacific Investments Corporation (MPIC) is among the country's biggest conglomerates capitalizing on this opportunity.
MPIC president and chief executive officer Jose Maria Lim said his company is expanding its logistics unit through acquisition and organic growth.
"We want logistics to be a major contributor to MPIC. We have our own internal targets. This logistics business started last year so it will take us another year to take us to the scale we want," Lim said in a press conference in Makati City on Wednesday, May 3.
MPIC has invested a total of P2.45 billion to build its own logistics business. Since 2016, the Manuel Pangilinan-led conglomerate has acquired 4 small logistics companies: Basic Logistics Corporation, A1 Move Logistics Incorporated, Philflash Logistics Incorporated, and BasicLog Trading and Marketing Enterprises.
In January 2017, MPIC also bought Ace Logistics Incorporated for P280 million. (READ: Pangilinan-led MPIC to Duterte admin: Let's start with a clean slate)
Lim said MPIC is not yet done with acquiring logistics firms. "We are working on several prospects – more than one."
For 2017, MPIC is investing a total of P4 billion to expand its logistics business.
"Logistics tends to be very specialized. We want to be in most aspects of it, but on shipping, we have to be on the right configuration and size first," Lim said.
When acquiring companies, Lim said there is no need for a majority stake if the operations are being efficiently managed.
It was in December 2006 when MPIC sold its 87.3% stake in 2GO's parent firm, Negros Navigation Company Incorporated (NENACO), to Tagud family-led Negros Holdings and Management Corporation (NHMC).
"It was a difficult experience for us. It was a small market. You have to have efficiencies right. At the same time, you must provide daily or at least 3 times a week service in different parts of the country. You can't survive if you can't make your presence felt," Lim told reporters.
NENACO is 60% owned by KGLI-NM Holdings Incorporated, which is a firm owned by NHMC (60%), Dennis Uy-led Udenna Investments (31%), and Kuwaiti Gulf Link Investments (around 9%).
The remaining 40% of NENACO was then in the hands of China-ASEAN Marine BV. SM Investments Corporation (SMIC) then bought a 34.5% stake in NENACO through China-ASEAN Marine. After the SMIC deal, China-ASEAN Marine is now left with a 5.5% stake in 2GO's parent firm.
Other than MPIC and SMIC, Ayala Corporation has also made moves of its own into e-commerce by acquiring online fashion platform Zalora, in a bid to create online and offline retailing synergies.
"We obviously feel the same way [regarding logistics]. MPIC continues to look for opportunities to grow its logistics business, and is in fact in discussion with several companies for potential acquisitions and partnerships," Lim said.
During the first quarter of 2017, MPIC saw its core net income increase by 14% to P3.1 billion from P2.7 billion in the same quarter last year. MPIC attributed this to its tollway unit's growth, expanded power portfolio, and improving hospital group. – Rappler.com