By Krista A. M. Montealegre
National Correspondent

BUSINESSMAN Dennis A. Uy began the year with guns blazing, closing deal after deal to take over companies and venture into new businesses.

His private holding firm Udenna Corp. bagged government approval in May to build an integrated resort and casino complex in Cebu, the first such development outside Metro Manila.

And just last week, Phoenix Petroleum Philippines, Inc. sealed the acquisition of the liquefied petroleum gas business of Malaysia’s Petronas Dagangan Bhd. while Udenna completed the takeover of Enderun Colleges.

“Entrepreneurial lang (We’re just being entrepreneurial)… We’ve been active before, but we didn’t get lucky,” Mr. Uy said in an interview when asked what prompted the deal-making spree.

It seems that the stars have finally aligned for the Davao native, whose rapid rise coincided with the ascent to power of a strongman from Mindanao — President Rodrigo R. Duterte.

“I’m just an admirer and supporter…” Mr. Uy said. “I’ll support him not because he’s from Davao, but in respect to other leaders, no leader can compare to him in terms of love for country.”

Mr. Uy’s not done yet. The spotlight will be on him once again when Chelsea Logistics Corp. (CLC), the logistics arm of Udenna, goes public this month — a decade after Phoenix listed on the Philippine Stock Exchange.

The shipping business started in 2006 to support the operations of Phoenix, an independent oil company operating in Mindanao. Back then, it was a challenge to secure vessels to deliver petroleum products, forcing Mr. Uy to buy his own tanker to serve the retailer’s requirements.

He made money in over a year and, on the fifth year, the shipping business was spun off to cater to a wider customer base and enter other logistics formats.

“You have to seize the opportunity. With Chelsea, we brought the company to where it is now (through) a lot of acquisitions. We had a lot of opportunities in Phoenix before but we were not aggressive — we lost (Shellane), we lost Liquigaz — because we’re not confident,” he said.

While Phoenix may have relied on organic growth to expand the business in the past, CLC will be more aggressive on acquisitions, Mr. Uy said.

The integrated logistics company is beefing up its war chest with an P8-billion initial public offering (IPO) that will fund an expansion program to cement its dominance in a highly fragmented industry and expand its business in the region.

Half of the proceeds will be used to purchase other shipping and logistics firms.

“At least by going public, we have more bala (ammunition) to compete and strengthen the position,” Mr. Uy said.

CLC aims to become the prime mover of goods and passengers in the Philippines, with expansion lined up in all segments of the logistics market: maritime transport services, marine auxiliary services, port services, and crewing and ship management.

Now the country’s largest shipping group, CLC operates a fleet of 34 vessels comprised of 11 tankers, four barges, three cargo vessels, six tugboats, and 10 roll-on/roll-off vessels.

Its tanker fleet accounts for about 18% of the industry’s gross registered tonnage.

CLC also has a substantial stake in 2GO Group, Inc., the largest supply chain enterprise and end-to-end solutions provider in the Philippines. Mr. Uy intends to raise his ownership stake in the company, which adds about 4-5% to Phoenix’s top line.

“We’re like (the) SM (of logistics). We got it all,” Mr. Uy said, alluding to the slogan of SM Investments Corp., its partner in 2GO.

CLC plans to “double earnings in five years” through fleet and route expansion as well as the development of facilities to support its core business such as the acquisition of ports and shipyards, Mr. Uy said.

CLC’s net profit increased by 35% to P132 million last year from P98 million in 2015, as revenues jumped 16.7% to P2.9 billion from P2.485 billion.

With the acquisition of a substantial stake in 2GO, the share of freight and passage to revenues will improve from the existing 23% and 16%, respectively. Charter fees account for bulk of revenues at 52%.

The IPO comes at a time when the shipping industry is gearing up for a major transformation triggered by changes in the regulatory environment. The government plans to phase out ships aged at least 35 years old, kicking off a race to get brand new vessels to capture a bigger market share.

Competition is also heating up. Big conglomerates like Metro Pacific Investments Corp., Ayala Corp., and SM acknowledge the huge opportunity in logistics amid strong economic growth prospects, opportunities presented by the integration of Southeast Asia and favorable outlook of online retail.

“It’s not an easy task… To build from scratch will take you years. We’re just lucky we were able to acquire something with scale,” Mr. Uy said.

In the medium term, CLC plans to buy medium-range tankers to service existing importation requirements of Phoenix and expand its passenger and cargo operations in the region.

It will acquire new, optimal-sized tankers and roll on-roll off vessels and expand into new routes leveraging its first-mover advantage.

CLC is awaiting the approval of the Securities and Exchange Commission for the maiden share sale that has been slated for launch this month.

Based on indications, institutional demand for the IPO is “very strong,” with the order book almost covered, said Eduardo V. Francisco, president of BDO Capital & Investment Corp. The investment banking arm of Sy-led BDO Unibank, Inc. is the underwriter of the equity offer.

“This is integrated logistics. Since 2GO has a very small float, this is a way to buy into 2GO,” Mr. Francisco said in a telephone interview.

Public ownership in 2GO stood at 11.66% at end-May.

What’s next for Mr. Uy?

“We’re into shipping now but maybe 10 years from now, who knows what will be our core (business),” he replied.

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