MPIC wants to buy Air21 to boost logistics unit

Infrastructure holding firm Metro Pacific Investments Corp. (MPIC) is interested to acquire 38-year-old logistics firm Air21, founded by businessman and former Customs Commissioner Alberto Lina, as part of its bid to be a major player in the logistics arena.

MPIC is mapping out a P4.5-billion medium-term growth program that will be a mix of acquisition and organic expansion, company chief finance officer David Nicol said. “Over the next couple of years, the expansion rate that our logistics business sees in front of them could see the need of up to P8 billion to support that expansion. Some of that is acquisition and some of that (will be in) distribution centers.”

When asked by Inquirer whether MPIC was in talks with Air21, MPIC president Jose Ma. Lim said the company was a “subject of interest.”

Asked if he thought Air21 had enough scale, Lim said the group indeed had a substantial footprint in the logistics industry.

Air21 delivers a wide range of services, including door-to-door deliveries, land transfer services, warehouse management for inventories and ship transfer. The Lina group of companies also has other operating companies, including cargo warehousing subsidiary Cargohaus and U-Freight.

“We’re working on several prospects. We have more than one prospect,” Lim said in a press briefing last week.

MPIC wants to beef up the logistics business to make this segment a major contributor to group-wide earnings. To date, the group is into electricity, water, tollroad and hospital businesses.

Following the acquisition of the logistics business and contracts of Basic Logistics and its affiliated companies in 2016, MPIC’s Metropac Movers Inc. recently completed another deal to acquire certain assets and business of Ace Logistics Inc. for about P280 million.

Ace’s businesses include warehousing, courier express and parcel delivery, e-commerce delivery, trucking, freight forwarding, customs brokerage and domestic shipping. It also has a strong presence in predelivery inspection in the automotive industry where MPIC intends to expand in.

“This logistics business started last year so it will take us another year or so to get us to the size we want. From there, we’ll still expect it to grow,” Lim said.

MPIC sees opportunity to acquire logistics companies given that the domestic industry is quite fragmented.

“We see a lot of logistics companies that are really just very specialized, (offering) corporate logistics or warehousing or shipping or freight forwarding,” he said.

MPIC, which owned shipping firm Negros Navigation Co. decades ago, said the logistics business it would like to build would not necessarily involve going back to the shipping business.

“In terms of logistics, we are really looking at transportation systems, warehouse management, orders fulfillment, but I don’t think we’ve got particular aspiration to be in the shipping business—not in the style of Negros Navigation in passenger shipping, which was a difficult business,” Nicol said.

“It was a difficult experience for us, to say the least. It’s a small market and you have to have the efficiencies right. At the same time, you must provide daily or at least three-times-a-week service to different parts of the country. You can’t hope to survive if you don’t make your presence felt. That means you have to have the right number of ships but not so large that you can’t fill them up. It’s a very challenging business,” Lim explained.

The fleet of Negros Navigation is now part of 2GO Group Inc., which has become an integrated transport solutions provider. It is not only in the business of moving people and cargo but also operates a supply chain that handles logistics, distribution, warehousing and inventory management. 2GO is now a partnership between Davao-based businessman Dennis Uy and SM Investments Corp.