Dennis Uy’s growing empire (and debt)

Ralf Rivas

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Dennis Uy is on a buying spree for companies. But can he sustain it?



  • Market observers worry that Davao businessman Dennis Uy is spreading himself thin
  • Uy’s Udenna Corporation’s liabilities soar by over 200% to P104 billion in 2017, with most funds poured for investments and acquisitions
  • Uy is set to spend and loan even more in 2019 for his ventures in telecommunications, oil, and infrastructure


MANILA, Philippines – Davao businessman Dennis Uy was the hot topic of the business community in 2018, as he further cranked up his buying spree for companies.

From oil, shipping, real estate, food, utilities, gambling, to telecommunications, Uy has most bases covered.

Uy, who donated P30 million to President Rodrigo Duterte’s candidacy, has bought 36 companies since the latter ascended to power.

For 2018, Uy bought convenience store chain FamilyMart, digital startup Pos!, Ferrari distributor Autostrada Motore, restaurant chain Conti’s, and water utilities company H2O Ventures.

Uy also signed a joint venture deal with TIPCO Asphalt Public Company and bought shares in the Manny Pangilinan-led PXP Energy.

Last year, he bought 19 companies. Prior to 2016, Uy had 11 companies in his arsenal. 

Uy is expected to further expand and strengthen his empire in 2019, particularly in the telecommunications space, after Udenna and its partner China Telecom was named the 3rd major telco player.

His venture with Pangilinan is also rumored to play a big role in the joint oil exploration talks between the Philippines and China.

With massive acquisitions and business ventures come trade-offs.

Rappler talked to 4 experts in finance and business and they all sounded the alarm: Uy’s balance sheet is not looking good.

Moreover, observers are asking why banks are so eager to pour in mounds of cash.

Massive gains and liabilities

Udenna’s 2017 financial statement reveals massive jumps and dips in the company’s numbers.

In just a year, the company’s total assets soared by a whopping 204% from P44.1 billion in 2016 to P134.2 billion in 2017.

However, its liabilities also jumped by over 200% to P104 billion in 2017, from just P34.6 billion the previous year.

Meanwhile, the holding firm’s earnings also jumped, with revenues up by 62.4% to P51 billion in 2017 from 2016’s P31.4 billion.

Taking out all expenses, Udenna’s net profit stood at just P4.1 billion in 2017. However, this is a 412.5% jump from 2016’s P800 million.

Medyo tagilid (it doesn’t look good), a quick look at what it earned versus its liabilities and you can just say that it’s a very weak balance sheet,” a finance expert who requested anonymity said.

Another market observer was also wary of Udenna’s figures, especially during a period of rising interest rates.

“Uy and Udenna have a lot to prove and a lot of catching up to do, and the figures alone are telling that he may be spreading himself too thin,” the source said.

Uy was able to acquire companies through bank loans.

Udenna’s interest-bearing loans in 2017 reached P85.8 billion, a 200% jump year-on-year.

Its major lenders were BDO Unibank, Philippine National Bank, and Bank of China-Cayman branch.

Udenna’s priciest transaction amounted to P34.1 billion to partially finance the acquisition of shares in Global Gateway Development Corporation, which holds the massive 177-hectare property in the Clark Freeport Zone.

The development is currently called Clark Global City, which aims to be the next central hub of Luzon in 10 years. 

In total, Uy spent P70.1 billion for his investing activities, up by a whopping 606.9% year-on-year.

To further illustrate the immense growth in expenses and assets, Rappler compared Udenna’s 2016 and 2017 figures with some of the country’s biggest conglomerates.

All growth rates of liabilities, profit, and expenses on investment activities of Udenna were much higher than Ayala Corporation (AC), Metro Pacific Investment Corporation (MPIC), and SM Prime Holdings (SMPH).

In 2017, Udenna spent P71.4 billion for investments, a 606% increase from 2016’s P10.1 billion. This means that Udenna spent much more than AC, which allotted P63.8 billion in 2017. 

Out of the 4 companies, only Udenna spent more for investment activities in 2017 compared to 2016. AC, MPIC, and SMPH tempered their investment activities in 2017.

Udenna Corporation spokesperson Adel Tamano said that their debts are “manageable.”

Tamano added that Udenna’s growth started two decades ago, starting off with Phoenix Petroleum and Chelsea Logistics.


The Duterte effect

But with a problematic balance sheet, why are banks still eager to fund Uy’s endeavors?

An investment banker said that banks usually look at several indicators like the debt-to-equity ratio, which is computed by dividing the company’s liabilities by its equities. 

The ratio is used to gauge the extent to which a company is taking on debt as a means of leveraging its assets. A high ratio is often associated with high risk.

Udenna’s debt-to-equity ratio in 2017 stood at 3.41:1.00, which, analysts said, was very high.

Big bank loans usually have a threshold of at most 2.30, while some allow up to 3.10. 

Udenna has at least 3 loans that have breached the debt-to-equity limits of loan terms, yet they were still granted the funds due to their ability to pay off loans on time and good relationships with banks.

However, the investment banker said that these requirements are not really strictly enforced in practice.

“It’s a gray area, and banks are betting on Uy. It helps that he’s close with Duterte,” the banker said.

Moreover, the industry insider said that Uy’s projects in land, infrastructure, and telecommunications are very enticing for banks.

“But if the loans go any further and the balance sheet keeps on tilting, banks may lose trust,” the banker warned.

More loans up ahead 

The dizzying numbers will likely keep on astounding the business community in the coming years.

Uy’s debut in the telecommunications space in 2019 will mean another round of massive cash coming in and out of Udenna. (READ: Blockbuster to lackluster: #TelcoSerye drama leaves people puzzled)

Mislatel, the consortium of Udenna and China Telecom, is set to spend P257 billion for infrastructure in 5 years. It promised to spend almost half of that or P150 billion in 2019.

Tamano said that Udenna may get loans from banks and from China Telecom.

“The restriction is on ownership, but the law allows us to loan from our partners like China Telecom,” he said.

Note that Globe spent only P42.5 billion for capital expenditures in 2017, while Smart‘s capex in 2017 was around P47 billion. 

“In respect to the first year, I think the impact would not be significant…impact on the market [and] on the revenue profile, because we are assuming the 3rd telco will have to build the relevant infrastructure,” Pangilinan said.

While Pangilinan already cast doubt over Uy’s telco venture, their partnership in the oil business is cozying up.

Uy bought 340 million shares in Pangilinan’s PXP Energy last October.

PXP Energy intends to use the funds raised to fund oil exploration activities. (READ: ‘Forces’ in gov’t pushed for PH-China oil deal – Locsin)

Pangilinan has repeatedly urged government to pursue oil exploration in the West Philippine Sea.

Apart from this tie-up, Uy’s oil business is booming, with Phoenix Petroleum set to secure another major contract for a liquefied natural gas import terminal in Batangas.

The Department of Energy earlier said that the evaluation for the application of Phoenix Petroleum and China National Offshore Oil Corporation is “almost complete.”

Meanwhile, Uy has also gained the upper hand to undertake the P30-billion, 34.9-kilometer intra-city urban rail system project in Mindanao.

Udenna already submitted an unsolicited proposal in 2017 and gained the original proponent status. 

It will have to go through the scrutiny of the National Economic and Development Authority, which will subject the rail project to a Swiss challenge.

With all the major projects in the pipeline, Uy is set to create more buzz in 2019. 

Rappler asked one businessman with the deepest pockets in the country whether he is worried about Uy’s rise. He simply said, “yes and no.”

“Exciting. But we’re keeping an eye on the red flags because they might affect us too,” he said. – 

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.