I Squared Capital Announces Major Acquisition
I Squared Capital has recently revealed its plans to acquire Philippines Coastal Storage & Pipeline Corporation, along with its affiliate entities. This acquisition marks a significant milestone for the firm as it strengthens its investment portfolio in Asia. The terminal, located in the Subic Bay Freeport Zone, is a key player in the region's energy landscape.
About Philippines Coastal Storage
Philippines Coastal Storage has established itself as the largest independent import terminal in the Philippines, boasting an impressive capacity of 6.3 million barrels. Serving a critical role in the Luzon Economic Corridor (LEC), the facility manages more than 20% of the nation's imported fuel storage. Its strategic location provides crucial access to metro Manila and North Luzon markets, making it the preferred terminal for institutions importing fuel into the country.
Strategic Importance
This acquisition is timely, as Philippines Coastal plays an integral role in ensuring a steady supply of liquid fuel products in the Philippines. With strong relationships with established commodity providers, it benefits from USD-denominated contracts that provide a steady revenue stream.
Driving Infrastructure Development
The recent launch of a steering committee by international leaders, including President Biden and Prime Minister Kishida, highlights the Philippine government’s commitment to enhancing infrastructure within the LEC. The committee aims to improve connectivity amongst key areas including Subic Bay, Clark, Manila, and Batangas. Philippines Coastal Storage is expected to function as a vital contributor to this initiative.
Future Investments and Opportunities
Harsh Agrawal, Senior Partner at I Squared Capital, emphasized the significance of the Philippines Coastal acquisition: 'This facility is an essential infrastructure asset that supports the increasing energy demands of the Philippines. With urbanization and a growing middle class, fuel demand is on an upward trajectory.' I Squared sees vast opportunities to develop the asset, which includes diversifying into more sustainable options such as bio-fuels and sustainable aviation fuel.
Operational Capabilities and Facilities
Since its operational inception in 1993, Philippines Coastal has been situated on a sprawling 160-hectare site under a 50-year lease with the Subic Bay Metropolitan Authority (SBMA). The facility hosts 91 tanks that cater to various fuel types and comprises two jetties suited for different vessel sizes—enhancing its operational flexibility.
Meeting Fuel Demands
The terminal contributes significantly to the Philippines' overall fuel supply, managing more than 55% of the country's jet fuel and over 35% of diesel and gasoline. As the Philippine government pushes for more sustainable fuel sources, Philippines Coastal is poised to be a key supplier, adapting to the new regulations that favor renewable fuel blending.
Commitment to Sustainability
Within Southeast Asia, the Philippines is leading the charge in sustainable fuel blending. Recent changes in government policy have mandated increases in bio-diesel contents, projecting further growth in sustainable fuel requirements. Philippines Coastal is actively preparing to support this transition by enhancing its storage capabilities for eco-friendly fuels.
Acquisition Logistics and Advisors
I Squared Capital's definitive agreement to acquire Philippines Coastal is carried out through its ISQ Global Growth Market Fund. The acquisition is being conducted with Keppel Infrastructure Trust, Singapore, and Metro Pacific Investment Corporation, Philippines as sellers. Standard closing conditions will apply, including necessary regulatory clearances.
About I Squared Capital
I Squared Capital is recognized as a leading global infrastructure investor, managing assets exceeding $40 billion. The firm is dedicated to fostering investment platforms that address complex infrastructural challenges while promoting sustainable development. With a team of over 280 professionals and a robust portfolio spanning more than 70 countries, I Squared’s mission is to provide essential services and infrastructure that benefit communities worldwide.
Frequently Asked Questions
What is Philippines Coastal Storage?
Philippines Coastal Storage is the biggest independent import terminal in the Philippines, managing a large portion of the country's fuel storage.
Why is I Squared acquiring Philippines Coastal?
I Squared aims to expand its portfolio and support the growing energy needs while investing in sustainable fuel solutions.
How does this acquisition impact infrastructure in the Philippines?
This acquisition is pivotal as it strengthens the Philippines' energy supply chain and supports ongoing infrastructure developments in the region.
What are the future plans for Philippines Coastal?
Future plans include expanding its capabilities to cater to increasing fuel demands and diversifying into sustainable fuel storage.
Who are the financial advisors for this transaction?
Rippledot Capital Advisers Pte Ltd served as financial advisors, with legal counsel from Latham & Watkins LLP.
