Puregold sets up subsidiary for minority investments in other food retail firms
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MANILA, Philippines — Retailer Puregold Price Club is setting up a new subsidiary to hold investments in other food retailing businesses as the flagship firm of businessman Lucio Co remains on the prowl for new prospective grocery chain acquisitions.
In a disclosure to the Philippine Stock Exchange on Wednesday, Puregold announced the establishment of another subsidiary in the name of Estenso Equities Inc., which would house investments in other food retail outlets.
Estenso Equities would hold interests in other grocery chains that would not necessarily be consolidated into Puregold, in cases where the existing owners would like to get a strategic or financial partner but maintain controlling interest, Puregold president Leonardo Dayao explained in a phone interview.
“There may be food retail businesses in which we may be acquiring certain equity position but are not going to be part of Puregold,” Dayao said.
“It’s a vehicle to give us flexibility to go into something that is not on a full ownership basis, in case there are investment opportunities,” he said.
The new subsidiary will thus represent Puregold’s portfolio investments in allied businesses. While earlier acquisitions were mostly businesses and brands that were consolidated into Puregold – such as S&R, Parco, Eunilane and 11GrocerE – this move signified Puregold’s willingness to take a non-controlling interest in prospective acquisitions. This also suggested that forging alliances in lieu of an outright buyout may become a key strategy to defend market share by preventing competition from getting a foothold in vital areas.
As fundamental market segmentation under the Co group, Puregold focuses on food retailing businesses while parent conglomerate Cosco Capital Inc. is meant to hold non-food retailing businesses on top of other logistics and real estate interests.
On “non-food” specialty retail, those eyed by Cosco are pharmacy and construction/hardware materials retailing. Earlier, a privately owned Co company has acquired Visayan pharmaceutical chain ThreeSixty.
