Metro Pacific, Keppel acquire Philippines’ largest oil storage facility
Metro Pacific Investments Corp. (MPIC), together with Singapore’s Keppel Infrastructure Trust (KIT), has acquired 100% of Philippine Tank Storage International Holdings Inc., which owns the Philippines’ largest petroleum import storage facility. The storage facility is located in Subic Bay, and was part of the former U.S. Naval Base, in northern Luzon.
Upon completion of the proposed acquisition, it is intended that KIT will indirectly hold 80% of the shares in PTSI. MPIC will indirectly hold 20% of the shares in PTSI.
The purchase consideration payable by KIT will be in proportion to its respective shareholding in PTSI and is estimated to be USD267.0 million, subject to adjustments after the completion of the proposed acquisition.
KIT is also in discussions with MPIC on a proposed grant of a call option, which will allow MPIC’s subsidiary to have a right to purchase up to 30% of PTSI. More details of the call option will be provided upon the execution of any definitive agreement.
“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,” said Matthew Pollard, CEO of Keppel Infrastructure Fund Management Pte Ltd (KIFM), the trustee-manager of Keppel Infrastructure Trust.
PCSPC comprises three tank farms and one marine terminal area, with a combined land size of approximately 150 hectares. Strategically located in the Subic Bay Freeport Zone, PCSPC is well placed to capture demand from Metro Manila, as well as Central and North Luzon, which account for more than half of oil product demand in the Philippines.
The Subic Bay Freeport Zone is a tax-friendly zone that is easily accessible by major oil refiners located in North and Southeast Asia via specialised vessels. The surrounding area has deep draft levels that is conducive to facilitate berthing of specialised vessels. The Subic Bay Freeport Zone is also naturally sheltered from typhoons, which provides PCSPC’s clients with year-round access.
When PCSPC completes a conversion in early 2021, it will have 86 storage tanks with a storage capacity of approximately six million barrels, which will account for approximately 36% of the total import terminal storage capacity in the country.
Being the third largest economy in Southeast Asia since 2017, the Philippines is projected to be the second largest economy in Southeast Asia by 2030 and is projected to grow 6.5% from 2020 to 20213. Sustained economic growth and healthy demand dynamics will support the long-term demand for various fuel products across multiple industries in the Philippines.
The proposed acquisition is expected to be completed by January 2021 and KIFM intends to fund the purchase consideration payable by KIT via existing cash and debt.