MPIC penetrates coco industry with P5.32 billion investment in Axelum

MANILA, Philippines — Listed infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) has forayed into the coconut industry with the acquisition of a 34.76 percent stake in Axelum Resources Corp. (ARC) for P5.32 billion.

A leading manufacturer and exporter globally of high-quality coconut products, ARC is one of the major suppliers of Vita Coco, the global market leader in coconut water, and is a major exporter of desiccated coconut, coconut milk/cream, coconut cooking oil and other coconut products.

In a disclosure to the Philippine Stock Exchange yesterday, MPIC said its subsidiary Metro Pacific Agro Ventures Inc. (MPAV) signed a sale and purchase agreement with various shareholders of ARC to acquire 1.19 million common shares at P4.05 apiece, or P4.82 billion.

They also signed an agreement for MPAV to subscribe to 200 million redeemable voting preferred shares of ARC at P2.50 apiece, or P500 million.

MPIC said this acquisition would be funded through internally generated cash.

With a goal of becoming a serious player in the agricultural field, MPIC’s foray into the coconut sector follows its investment in the dairy sector last year.

“The north star of our agriculture business is helping our country achieve food security. This investment into ARC will mean more income opportunities for coconut farmers as well as a broader landscape for Philippine agriculture,” MPIC chairman, president and CEO Manuel V. Pangilinan said.

Meanwhile, the entry of MPIC will allow ARC to further develop and transform the Philippine coconut industry, ARC chairman and CEO Romeo Chan said.

“We proudly welcome our new partners, MPAV and the entire MPIC organization, and we thank them for sharing the same values and ambition to advance the coconut industry by synergizing our resources and expertise,” he said.

“More importantly, this puts us in a strong position to help uplift the marginalized coconut farming communities in our country and contribute to the continuous development of the agricultural sector,” Chan said.

MPIC’s investment will be used to improve facilities and bankroll its expansion program, ARC officials said.

For its coconut water line, ARC is looking to increase this to one million liters per month from its current capacity of three million liters a month, ARC president and COO Henry Raperoga said in a media roundtable yesterday.

“Right now, we have placed an order for an expansion of our coconut water line. We’re about to put up a 500-ML machine that will give us the capacity to produce four million liters per month of coconut water,” he said.

Currently, the utilization rate of the existing coconut water line is at 85-90 percent.

“By putting up additional capacity, we will be able to maximize our production,” Raperoga said.

ARC processes around 600,000 to 700,000 coconuts per day, bought from 15,000 to 20,000 coconut farmers and cooperatives as far as 200- to 300-kilometer radius from its plant in Medina, Misamis Oriental.

“We’re buying coconut at a premium [because] we demand the right type of coconut…We pay as much as 25 to 35 percent premium. That’s why we’re giving extra money for farmers just for them to go for full [mature coconuts],” Raperoga said.

Majority of ARC’s products are for exports, cornering 90 to 92 percent of the total output whereas only eight to 10 percent are for local distribution.

Its top market is the US, with over 50 percent of market share, followed by Australia and then the Philippines.

Apart from these markets, ARC also exports to Canada, Australia, New Zealand, Eastern Europe, Middle East, Japan, and some countries in Asia.

Augmenting ARC’s focus on export, MPAV aims to nurture a higher level of patronage of these products by local consumers.

“The Philippines enjoys global renown for its coconut products. Axelum has had an impressive history—having helped establish the country as the world’s leading producer of high-quality coconut products,” MPAV president and CEO Jovy Hernandez said.

“We at MPAV are eager to work with Axelum not only to strengthen their international business but also to develop the domestic market and support our local coconut farmers,” he said.

For the local market, ARC is cooking up new products still based on coconut.

“With MPIC’s entry, we’re expanding the domestic market. We have in the pipeline several products we are developing using coconut. It’s still in the pipeline. We’re finalzing the formulation, but as soon as were confident that that’s the right quality we want, then we’re going to launch it,” Raperoga said.

ARC is present in over 30 export markets, with an extensive coconut portfolio ranging from coconut milk and desiccated coconut to coconut water and coconut cream, under the homegrown labels Fiesta, Fiesta Tropicale, Red V and Romantika.

In addition, it is a top strategic supplier to Vita Coco, the world’s largest and most popular coconut water drink.

Meanwhile, MPIC – through MPAV—continues to look for other opportunities in the agricultural sector, while aiming to achieve a wider presence in the dairy industry.

This venture in agribusiness affirms MPIC’s resolve to be the largest catalyst for a sustainable Philippines to achieve food security and ultimately food independence.

It is also aligned with the efforts of both MPIC and ARC to contribute to the United Nations Sustainable Development Goals (UN SDGs), particularly Goal 2: End hunger, achieve food security, improve nutrition and promote sustainable agriculture.