MANILA, Philippines & MIAMI–(BUSINESS WIRE)–I Squared Capital announced on October 23, 2024 that it has entered into an agreement to acquire Philippines Coastal Storage & Pipeline Corporation and its affiliate entities.

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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Keppel Infrastructure Trust (KIT) and Metro Pacific Investments Corporation (MPIC) formally execute the purchase of PCSPC.

MPIC also executed the call option to purchase the additional 30% of PTSI, so that the indirect shareholding will be 50% KIT and 50% MPIC.

Keppel Infrastructure Trust and Metro Pacific Investment Corporation to acquire Philippine Coastal Storage & Pipeline Corporation

• Acquisition of the largest petroleum products import storage facility in the Philippines
• A quality infrastructure business that will strengthen KIT’s portfolio

Keppel Infrastructure Fund Management Pte Ltd (KIFM), as the Trustee-Manager of Keppel Infrastructure Trust (KIT), is pleased to announce that KIT and Metro Pacific Investments Corporation (MPIC) have today entered into a conditional sale and purchase agreement with Philippine Investment Alliance for Infrastructure (PINAl)¹, a fund, to acquire 100% interest of Philippine Tank Storage International (Holdings) Inc. (PTSI) which owns Philippine Coastal Storage & Pipeline Corporation (PCSPC), the largest petroleum products import storage facility in the Philippines.

Upon completion of the proposed acquisition, it is intended that KIT will indirectly hold 80% of the shares in PTSI and MPIC will indirectly hold 20% of the shares in PTSI.

Mr Matthew Pollard, CEO of KIFM, said, “The strategic acquisition of PCSPC will allow KIT to diversify, grow and strengthen the resilience of KIT’s distributable cash flow. As the largest petroleum products import storage facility in the Philippines, where demand for petroleum products is expected to grow, PCSPC presents an attractive opportunity for KIT to capture opportunities arising from the strong macroeconomic outlook as well as robust growth fundamentals for imported petroleum products in the Philippines.”

¹ The PINAI comprises Government Service lnsurance System, Langoer Investments Holding B.V. and Macquarie Infrastructure Holdings (Philippines) Pte. Limited.

PCSPC inaugurates another expansion project in its Maritan Tank Farm. The construction includes three (3) 180,00 barrels capacity fuel storage tanks, two (2) 50,000 barrels capacity fuel storage tanks, four (4) additive tanks, a loading rack, control office, and auxiliary facilities.

Despite being hampered by the COVID Pandemic, the project was completed in 18 months, on budget, and was commissioned in the last quarter of 2020. Constructed by the Aboitiz Construction Group, Inc., the facility conforms with international standards, and its first use was Oct 1, 2020.

With its completion, the Company’s total capacity increased to 6 million barrels for various fuel products. It also strengthens the ability of the terminal to cater to clients and customers supplying fuel to Northern and Central Luzon and parts of the National Capital Region.

To date, PCSPC remains the largest independent fuel storage facility in the Philippines.

Two additional fuel storage tanks were commissioned in Boton Tank Farm, Subic Bay Freeport Zone. Completed in 2019, the project includes one tank of 15,000 barrels and one of 20,000 barrels capacity, a new loading gantry, an inspection gantry, a control office, and other auxiliary facilities. The project conforms to international standards. On completion, the terminal had increased its capability to serve the increasing need for fuel storage. Further, it increased the Company’s capacity to 5.8 million barrels-solidifying PCSPC as the largest independent fuel storage in the Philippines.

A new administration building was formally turned over to PCSPC in 2019. The 2-storey building was completed in 24 months and will initially house Support Services Group such as Admin staff, Accounting, Engineering, HR and Quality Assurance. The new building creates a better working environment to meet our clients’ needs and represents the rapid growth of the business.

Philippine Coastal Storage and Pipeline Corporation (PCPSC) has successfully completed the construction of 540,000 barrels of additional storage capacity and loading facilities at its operations within Subic Bay Freeport Zone (SBFZ). Three (3) new 180,000 barrel fuel storage tanks and two (2) tank truck loading racks, were built over 12 months, on time and on budget, by Aboitiz Construction Group Inc. The new tanks, built to today’s international standards, will increase PCSPC’s total fuel storage to 5.2 million barrels (or 827 million litres) of various fuel products such as diesel, gasoline, jet and fuel oil. This also completes PCPSC’s commitment to SBMA to invest and build 1.8 million barrels of fuel tank storage in Maritan tank farm.

Mr Michael Rodriguez, Chairman of PCSPC, said, “This considerable increase in storage is in response to our customers’ demand for quality and available fuel storage in Subic Bay, and we are pleased to be able to provide this new expansion to accommodate their needs.”

PCSPC’s strategic location in the SBFZ provides for efficient importation of fuel products for storage and onward distribution along the network of well-maintained toll roads to Clark, Manila, Central and Northern Luzon. SBFZ also provides an efficient coastal location for hub operations with imports from regional refineries for onward export distribution to the region

Mr Rodriguez added, “With our existing long term lease agreement with Subic Bay Metropolitan Authority, PCSPC looks forward to being able to undertake further investment, as demand requires, in order to serve the increasing fuel needs of the Philippines now and in the future.”

PCSPC operates the petroleum storage and pipeline facilities of the former Subic Bay Naval Base. The facility was originally constructed in 1953 with 2.4 million barrels of capacity. Capacity has doubled over the past 6 years. PCSPC was acquired by The Philippine Investment Alliance for Infrastructure (PINAI) fund in 2014. PINAI is a 10-year, closed-end fund, dedicated to equity investment in Philippine infrastructure, and managed by Macquarie Infrastructure Management (Asia) Pty Limited.

Subic Bay Freeport Zone – PCPSC is to increase its storage capacity by 540,000 barrels in 2017 by adding three (3) new tanks at its Subic Bay Freeport Zone facility. Aboitiz Construction Group Inc have been awarded the contract to build the three new 180,000 barrel capacity tanks, tank truck loading racks and associated facilities which are due for completion in May 2017. The new tank facility will be interconnected to the existing piers to allow dedicated vessel discharge and barge loading. The total capacity of PCPSC will therefore increase to 5.24 million barrels in 2017.

 The decision to increase capacity follows a steady increase in demand from our customers for their various fuel product storage requirements. PCSPC’s strategic location in the Subic Bay Freeport Zone allows the means of reliable/sustainable fuel supply for timely deliveries, safe importation and storage, good proximity to fuel hubs within the Asian region, good road networks for distribution from Subic Bay to Clark and onwards to Northern Luzon and Manila, and easy coastal access for barge trans-shipments throughout the Philippines. Coupled with an existing long term lease agreement with Subic Bay Metropolitan Authority, PCSPC is very pleased to be able to commit to this long term investment to further serve the fuel needs of the Philippines both now and in the future.

Subic Bay Freeport Zone – On Dec. 15, 2013, PCSPC received formal turn-over from its contractor of a newly constructed barge loading facility with an overall length of 200 meters designed to cater for smaller vessels ranging from 500 to 6,400 DWT.  The new jetty is supported by seven mooring dolphins and is equipped with state of the art marine loading arm produced and manufactured in Germany by EMCO WHEATON® and Rubber Fender System from TRELLEBORG®.

The new jetty is currently being outfitted with pipes for receiving and discharging of petroleum products to and from storage tanks situated inside Boton Tank Farm, SBFZ which is scheduled to be completed by end of February 2014.

Subic Bay Freeport Zone – On Dec. 09, 2013, PCSPC has completed construction of seven storage tanks and related facilities.  These facilities were designed and constructed in accordance with the standards embodied in the National Building Code of the Philippines (NBCP) (PD 1096) and American Petroleum Institute (API 653 4th Edition 2009,10.5).  PCSPC’s new facilities also received a Certificate of Conformance to API Standard 653 from SGS. SGS is the world’s leading inspection, verification, testing and certification company.

The tanks are now fully operational bringing the total storage capacity of PCSPC to 4.6 million barrels of petroleum and petroleum related products.