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Miami-based private equity firm I Squared Capital will acquire the largest independent petroleum products import storage facility in the Philippines
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I Squared, through its ISQ Global Growth Market Fund, signed a definitive agreement to acquire Philippines Coastal Storage & Pipeline Corp. from Keppel Infrastructure Trust and Metro Pacific Investment Corp. in a $296-million deal
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The transaction closing is expected in late 2024, subject to certain customary conditions, including anti-trust clearance in the Philippines
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I Squared said it sees strategic opportunities to expand the asset’s capabilities to support growing domestic demand and to diversify into the storage of bio-fuels and sustainable aviation fuel
Miami-based private equity firm I Squared Capital will acquire Philippine Coastal Storage & Pipeline Corp. (PCSPC), the largest independent petroleum import terminal in the Philippines, from Singapore-based Keppel Infrastructure Trust and Metro Pacific Investment Corp in a $296-million deal.
PCSPC is equally owned by Keppel Infrastructure Trust and MPIC.
Subject to certain customary conditions, including anti-trust clearance in the Philippines, the transaction close is expected in late 2024, I Squared said in a statement.
PCSPC’s 160-hectare facility in Subic Bay Freeport Zone includes marine terminal, fuel storage tank farms and tank truck loading facilities. The storage and handling facility can now hold a total of 6 million barrels of petroleum and petroleum-related products. PCSPC houses over 20% of the country’s import storage capacity.
I Squared noted that the terminal 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.
I Squared said PCSPC benefits from US-dollar denominated take or pay contracts with strong, credit worthy customers with whom the firm has long-standing relationships.
In April 2024, US President Joe Biden, Japanese Prime Minister Fumio 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. I Squared said PCSPC, based in Subic Bay, will be a key enabler of future investments in the LEC.
“Philippine Coastal is an essential infrastructure asset playing a critical role in supporting the growing energy needs of the Philippines,” I Squared senior partner Harsh Agrawal said.
He added: “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, PCSPC has been operating the facility under a 50-year lease with Subic Bay Metropolitan Authority, with a discretionary option to extend the lease by another 15 years. Spread across nearly 160 hectares, PCSPC 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.
PCSPC’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, I Squared noted that 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. I Squared said PCSPC will play an important role in supporting energy transition initiatives by building world class storage infrastructure to store sustainable fuels.
