I Squared Capital announced today that it has entered into an agreement to acquire Philippines Coastal Storage & Pipeline Corporation and its affiliate entities.

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Philippines Coastal terminal at Subic Bay. (Photo: Business Wire)

Based in the Subic Bay Freeport Zone, and serving the Luzon Economic Corridor (LEC), Philippines Coastal is the largest independent import terminal in the Philippines. With a capacity of 6.3 million barrels, Philippines Coastal houses over 20% of the country’s import storage capacity.

Philippines Coastal plays a vital role in ensuring the reliable entry of liquid fuel products into the country by serving the needs of major commodity providers and other strategic interests. With its deep jetties and strategic location, it is well-positioned to serve the metro Manila and North Luzon markets and is the terminal of choice for large institutional players importing fuels into the country. Philippines Coastal benefits from USD denominated take or pay contracts with strong, credit worthy customers with whom the firm has long-standing relationships.

In April 2024, President Biden, Japanese Prime Minister Kishida and Philippine President Ferdinand Marcos, Jr., launched a steering committee to drive infrastructure development in the country’s Luzon Economic Corridor, supporting connectivity between Subic Bay, Clark, Manila, and Batangas in the Philippines. Philippines Coastal, based on Subic Bay, will be a key enabler of future investments in the LEC.

Harsh Agrawal, Senior Partner, I Squared said: “Philippines Coastal is an essential infrastructure asset playing a critical role in supporting the growing energy needs of the Philippines. With urbanization and the growing consumption of the rising middle class in the Philippines, fuel demand continues to increase steadily. We see strategic opportunities to expand the asset’s capabilities to support this growing domestic demand and to diversify into the storage of bio-fuels and sustainable aviation fuel.”

Since 1993, Philippines Coastal has been operating the facility under a 50-year lease with Subic Bay Metropolitan Authority (SBMA), with a discretionary option to extend the lease by another 15 years. Spread across nearly 160 hectares, Philippines Coastal has 91 tanks servicing different fuel types. It has two jetties – the main jetty can handle Medium Range 1 vessels (up to 50,000 DWT) while the secondary jetty is suited to serve transshipment to other islands within the country.

Philippines Coastal’s catchment area covers a substantial portion of the Philippines’ overall fuel demand (over 55% of Jet fuel, over 35% of diesel / gasoline) and a growing need for sustainable fuels like ethanol and coconut based bio-diesel.

Within Southeast Asia, the Philippines is a leader in sustainable fuel blending. In October, the Philippine government increased the bio-diesel blending requirement to 3%, which will increase to 5% over the next couple of years. Currently, 20% ethanol blending in petrol is voluntary and the government is looking at making it mandatory in the future. Philippines Coastal will play an important role in supporting energy transition initiatives by building world class storage infrastructure to store sustainable fuels.

I Squared has signed a definitive agreement to acquire the company through its ISQ Global Growth Market Fund. I Squared is acquiring Philippines Coastal from Keppel Infrastructure Trust, Singapore and Metro Pacific Investment Corporation, Philippines. The closing is subject to certain customary conditions, including anti-trust clearance in the Philippines. Subject to the satisfaction or (if applicable) waiver of such conditions, closing is expected in late 2024.

I Squared’s financial advisor for this transaction was Rippledot Capital Advisers Pte Ltd. International Counsel was provided by Latham & Watkins LLP, Singapore and Philippines Counsel was Romulo.

About I Squared

I Squared is a leading independent global infrastructure investor with over $40 billion in assets under management. We are known for the development of investment platforms in infrastructure projects where we start small and grow big. We use global insights and deep local intelligence to solve complex problems, foster smarter businesses, serve local communities, and invest in a more sustainable future to provide essential services to millions of people around the world. We are a team of over 280 people, headquartered in Miami with offices in Abu Dhabi, London, Munich, New Delhi, São Paulo, Singapore, Sydney and Taipei. We operate a diverse portfolio of 86 companies in more than 70 countries with over 66,000 employees in a variety of sectors including utilities, energy, digital infrastructure, transport, environmental infrastructure, and social infrastructure. You can find out more by visiting: www.isquaredcapital.com.

Disclaimers

This document does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. It is provided for information purposes only. Investing involves risk, loss of principal is possible.

Specific investments described herein do not represent all investment decisions made by ISQ. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.

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