Cosco acquires top LPG supplier

MANILA, Philippines - Cosco Capital Inc., the investment vehicle of Lucio and Susan Co, is venturing into the liquefied petroleum gas (LPG) business with the acquisition of the country’s top LPG supplier.

The listed holding firm wants to complement the new business with a downstream retail network catering to end users, the company said yesterday.

In a regulatory filing, Cosco Capital said it will acquire 90 percent of the capital stock of market leader Liquigaz Philippines Inc., with PR Gaz Inc. retaining a 10-percent stake. The deal, whose transaction value was not disclosed, will be completed in the next few days.

“The acquisition will mark Cosco Capital’s entry into the LPG business with a strong initial presence in the upstream business,” the holding firm said.

Liquigaz is the largest LPG supplier in the country, accounting for 30 percent of the total market volume. It is also the biggest seller of LPG in Luzon, the site of its storage facilities.

More than 60 percent of the country’s total LPG imports are unloaded, stored, and sold from Liquigaz’s storage tanks in Mariveles, Bataan with a capacity of 12,500 metric tons, making it the largest in the Philippines.

It is the only supplier capable of receiving both refrigerated and pressurized LPG cargo, Cosco Capital said.

Moving forward, Cosco Capital plans to make use of its retail expertise to enhance the business of Liquigaz.

“Cosco Capital envisions a move towards the downstream retail business in the near future via either merger and acquisition of existing re-fillers or establishing its own re-filling network, and eventually, retailing LPG directly to the wider household end-user market,” the company said.

To date, Liquigaz is mainly into the wholesaling portion of the market, with 85 percent of its traded volume going to refillers and distributors. The remaining 15 percent is sold to commercial end-users like restaurants, hotels, fast food outlets, hospitals, supermarkets and autogas stations.

Liquigaz, which was set up in 1995, is a wholly-owned subsidiary of the Netherlands’ SHV Gas, one of the largest dedicated global LPG distributors operating in almost 30 countries.

For its part, Cosco Capital is into supermarkets (Puregold Price Club Inc.), liquor importation (Premier Wine & Spirits Inc.), commercial real estate and oil storage and oil exploration activities.

Cosco Capital claims to be the country’s leading importer of liquor with exclusive distribution rights for some of the world’s top brands like Cuervo, Jim Beam, Fundador, Absolut Vodka, Johnny Walker, Chivas Regal and Alfonso.

Pro-forma net income of Cosco Capital hit P5.3 billion last year, up 83 percent from P2.9 billion a year ago while pro-forma net income attributable to equityholders of the parent firm surged 120 percent to P3.3 billion from P1.5 billion.

Last year, the Co family infused a 51-percent stake in country’s second largest grocery chain Puregold Price Club Inc. and a portfolio of other companies into Cosco Capital, formerly Alcorn Gold Resources Corp.