Dennis Uy’s Chelsea Logistics Wants a bigger Pie of 2GO

MANILA, Philippines – Fueled by domestic consumption and e-commerce, almost every large conglomerate in the Philippines wants a share of the booming logistics market. A businessman from Davao does not want to get left behind, as he plans to acquire a bigger stake in 2GO Group Incorporated through his shipping company.

Chelsea Logistics Holdings Corporation, the shipping arm of Uy-led Udenna Corporation, said in a statement on Thursday, May 18, that it locked in a $200-million (P10.96 billion) loan with Bank of China, as “it works toward a bigger role in the country’s transportation and logistics industry.”

Right now, Chelsea Logistics’ parent company, Udenna, indirectly has 21% voting and 28% beneficial interests in 2GO.

Udenna owns 31% of KGLI-NM Holdings Incorporated, which, in turn, has 60% stake in 2GO’s parent firm, Negros Navigation Company Incorporated (NENACO). (READ: Logistics boosts 2GO’s net income in 2016)

“Our investment in 2GO aligns with our commitment to contributing to our economy’s growth story by facilitating more efficient trading within and outside the archipelago,” Chelsea Logistics founder and chairman Dennis Uy said.

Bank of China granted the loan under the initial $3-billion financing package it committed, during the state visit of President Rodrigo Duterte to China in October 2016. Uy is one of the major campaign contributors of Duterte.

Other than the bank loan, Chelsea Logistics plans to raise as much as P8 billion via initial public offering, which is slated in July this year.

Chelsea Logistics continues to expand organically and through other acquisitions to become the prime mover of goods and passengers in the Philippines.

This will be the second company of the Udenna group to go public after Phoenix Petroleum Philippines Incorporated.

Udenna ventured in the logistics sector as early as 2006 through Chelsea Shipping to support the operations of Phoenix Petroleum, formerly Davao Oil Terminal and Services Corporation.

Other than Chelsea, Metro Pacific Investments Corporation (MPIC), SM Investments Corporation (SMIC), and Ayala Corporation has also made moves to make the most of the logistics craze.

MPIC eyes to do two more acquisitions to be a major contributor in the industry. 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.

Meanwhile, SMIC in March this year completed the acquisition of a minority stake in 2GO Group through a 34.5% stake in its parent company.

Ayala 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.

San Miguel Corporation chief Ramon Ang, however, said that he will let the other conglomerates scramble for their shares in the logistics market.

 

Source: https://www.rappler.com/business/170253-dennis-uy-chelsea-logistics-china-loan

Author: Chrisee Dela Paz (Rappler)

Published Date: May 18, 2017