Conglomerate Metro Pacific Investments Corp. is venturing into the logistics and distribution business with an initial investment of P2 billion on strong demand in the country.
Metro Pacific president Jose Ma. Lim said in a press briefing the company would acquire the assets of Pasig City-based, mid-sized corporate logistics provider Basic Logistics Corp.
Lim said the company would later form a new company, Metro Pacific Movers Inc., in joint venture with the shareholders of Basic Logistics, to provide logistics, shipping, freight forwarding and e-commerce services.
Lim said Metro Pacific would initially hold a 76-percent interest in MPMI, while the owners of Basic Logistics would hold 24 percent and continue to manage the business.
The deal is expected to be completed next week.
Metro Pacific is in talks with a foreign investor that will come in as a minority investor in MPMI. The entry of the foreign investor could reduce Metro Pacific’s stake in MPMI to 51 percent.
The company, a unit of Hong Kong-based Frist Pacific Co. Ltd. of Indonesia tycoon Anthoni Salim, has also committed to invest P5 billion in the business over a five-year period.
Metro Pacific chairman Manuel Pangilinan said the potential for the logistics business was significant in the Philippines considering that the geography required a good infrastructure.
“We are looking at Basic Logistics as our core investment. In a way it will be an education journey for us to learn about the intricacies of the logistics and distribution business because it is a fairly complex business,” Pangilinan said.
Pangilinan said the group’s venture into logistics business would provide synergies to the company’s existing businesses in terms of the warehousing requirements of Manila Electric Co. and Philippine Long Distance Telephone Co.
Meanwhile, Metro Pacific said net income in the first three months of the year grew eight percent to P2.6 billion, while consolidated revenues climbed 24 percent to P10.6 billion.
Lim attributed the positive first-quarter performance to strong traffic growth of its tollroad business, strong earnings contrition from Meralco and the growth of its hospital group.
Lim said the earnings would have been stronger if the delayed tariff rate adjustments of its water, tollway and rail businesses were implemented.
“More positively, I expect continued strong volume growth for the rest of the year and our initial move into the logistics sector, an obvious adjunct to our infrastructure businesses, offers strong growth potential but minimal regulatory engagement,” Lim said.