MANILA -- When Phoenix Petroleum Philippines celebrated the 10th anniversary of its listing at an event at the Philippine Stock Exchange on July 11, an unlikely special guest was on hand: President Rodrigo Duterte.
The leader has shrugged off previous invitations to the bourse and has made no secret of his aversion to the markets, once suggesting he could hardly decipher stock charts.
But here he was, and he was positively gushing about Phoenix.
"Your inspiring story exemplifies the resilience of the Filipino entrepreneurial spirit," said Duterte, who tends to be stingy with his praise for big companies in public. "It is my hope it will encourage other companies to invest in the stock exchange, especially aspiring businessmen."
In his speech, Phoenix founder and CEO Dennis Uy was similarly effusive. "I thank President Duterte for being our inspiration and my inspiration -- a leader who is fair and just, decisive and a man of vision and action," he told investors and stockbrokers who had gathered at the exchange.
The mutual admiration between the two men stems from their shared history and geographical roots. Phoenix traces its beginnings to the southern city of Davao, where the company is headquartered and where Duterte was mayor for over 20 years before winning the May 2016 elections by a landslide. Uy was one of the local businessmen who helped finance Duterte's successful bid, which stunned the political and business elite in Manila.
"He is a mentor in life [and] in leadership," Uy told Nikkei Asian Review.
Setting the stage
Duterte said he "personally witnessed" Phoenix's ascent, watching it transform into a national player that now goes head to head with the likes of such multinationals as Royal Dutch Shell and Chevron of the U.S. But Uy said Duterte was no mere passive observer but in fact was instrumental in the company's success.
"He encouraged entrepreneurs by making it easy to do business by removing bureaucracy," the CEO said at the exchange, recalling the ease of doing business in Davao with Duterte as mayor. "This is how we were able to build [gas] stations in less than three months, compared to over six months in other parts of the country."
Foreign and local investors who have poured money into Davao have described the city, located on the largely rural island of Mindanao, as an ideal commercial hub. Its image of being free of crime and corruption thanks to its tough former mayor has attracted manufacturing and outsourcing companies.
Phoenix has become a symbol of the type of homegrown enterprises that have flourished in the business environment that Duterte created. In 2016, it saw its revenue rise 2%, to 30.57 billion pesos ($593 million), and its net profit increase 21%, to 1.09 billion pesos. But the Philippine president may soon have a longer list of corporate names to cite when he talks about Davao success stories.
On a roll
Uy has been aggressively building up his business empire since Duterte came to power on June 30 last year.
On Aug. 8, the CEO listed Chelsea Logistics Holdings on the PSE after raising 5.84 billion pesos through the initial public offering. The company, established in Davao in 2006 to support the logistical needs of Phoenix, is looking to acquire more vessels to help the company expand in Southeast Asia.
But that is just one of Uy's latest moves. In September last year, he launched a takeover of 2GO Group, the nation's largest end-to-end logistics company, despite efforts by shareholders at the target company to block the move. In May this year, he secured a license to build a $341 million resort and casino, as well as took out a $220 million foreign loan. That's not all: Uy recently purchased Enderun Colleges, a hospitality management school, and Petronas Energy Philippines, a liquefied petroleum gas retailer.
This gargantuan shopping spree grabbed headlines and turned the heads of business observers in the capital. Uy is on a roll, and some say his relationship with Duterte is why.
"[Uy] has been a longtime investor in the south, and just like any businessman, you use your connections, not necessarily political, in galvanizing business opportunities," said Astro del Castillo, managing director at First Grade Finance, an investment house in Manila.
Runs in the family
But the serial entrepreneur from Davao had his eyes on the big time well before Duterte came to power.
Business is in Uy's blood. In the 1930s, his grandparents emigrated to Davao from the Chinese province of Fujian. They went into the copra trading and other businesses, including mining and retailing. Some members of the family went into politics in Mindanao.
Before founding Phoenix in 2002, Uy -- today a 43-year-old father of three -- managed the family's businesses, which included a car dealership. He had also opened a chain of restaurants in Davao, which he later sold to his sister.
In 2002, four years after the Philippines deregulated its oil industry, drawing such foreign players as Thailand's PTT and France's Total, Uy started thinking about going into oil retailing.
After scraping together 30 million pesos from his savings, inheritance and stock investments, Uy struck out on his own. "I needed to chart my own destiny," he said.
He was just 28 when he established Phoenix. "I told myself: I'll take a gamble while I'm young," Uy said. "My motto at that time was 'no guts, no glory.'"
In 2006, Uy founded Chelsea Shipping, the predecessor of Chelsea Logistics, to ensure that Phoenix could receive a stable supply of oil. Until then, Phoenix depended on the availability of rented tankers.
Today, Chelsea is a leading shipper that serves such big-name clients as budget airline Cebu Air and Phoenix rival Petron, a unit of beverage titan San Miguel. In 2007, Phoenix went public, giving it the money needed to grow into the country's largest independent retailer in 2012. Despite those achievements, however, Uy and his empire largely remained off the public's radar.
That was mainly by choice.
"So we've been actually growing, but we didn't publicize it," Uy said. The CEO said he did not start regularly talking to the press until a public relations consultant persuaded him.
He acknowledges that the current political environment has emboldened him to take big risks, but Uy insists he would have launched his acquisition blitz even if Duterte had not been elected. "I guess the confidence level in investing increased by a notch or two because of the leadership," Uy conceded.
In May, Chelsea Logistics obtained a $220 million loan from Bank of China as part of a $24 billion credit and investment pledge that Duterte secured during his visit to China in October. The money will be used to finance the expansion of the logistics business, Uy said.
Political tail wind
The CEO has also aligned his businesses with Duterte's priorities. In building a $341 million integrated resort on the island of Cebu, Uy hopes to woo Chinese tourists. He expects more Chinese visitors to flock to the country following Duterte's visit to China last year to boost economic ties and set aside maritime disputes in the South China Sea.
Uy also believes Duterte can make the country safer, and therefore more attractive to tourists. When asked if he supports the anti-narcotics crackdown that has led to the deaths of thousands of suspected peddlers and users, the CEO said, "There's no other way."
On the logistics business side, too, Uy is likely to get a boost from Duterte's policies. The president wants to promote stronger links between rural and urban areas, which is expected to fuel inter-island movement along the archipelago and thus jack up demand for logistics services.
Investors like Uy. As of August 18, shares in Phoenix have surged 93.55% since June 30, 2016, while 2GO has soared 186.11% -- even after a fresh audit of 2GO's books lopped 90% and 74% off its 2015 and 2016 earnings, respectively. These stellar performances are especially impressive when considering that the benchmark PSE index rose just 2.83% over the same period.
Eduardo Francisco, president of BDO Capital and Investment, the underwriter of Chelsea's IPO, said the issue was three times oversubscribed -- although Chelsea's share price has languished since the listing.
In March, Uy received a vote of confidence from the Philippines' most valuable conglomerate when SM Investments acquired a roughly 30% stake in 2GO. SM's backing will better equip Uy to take on such giants as Metro Pacific Investments, an affiliate of Indonesia's Salim Group and Ayala Corp., a major Philippine conglomerate, which are also expanding into the country's fragmented logistics industry.
SM President Frederic DyBuncio, who sits on the boards of 2GO and Phoenix, likened Uy's business acumen to that of the Sy family, which owns SM. "He is an entrepreneur, and he has some very good ideas in growing the business," DyBuncio said.
Uy's appeal is not limited to domestic investors. Suitors from Japan, China, Southeast Asia and the Middle East -- all places that Duterte has visited -- have also approached the tycoon about possible partnerships.
First Grade Finance's Astro del Castillo said investors are encouraged by Uy's political connections, but that is not the primary drawing card. "You cannot do away with the political connection, but I don't think that's the main reason why investors are confident," del Castillo said. "It's mainly the potential of the sectors he is into."
In the Philippines, where regulatory and judicial institutions are not fully developed, businesspeople tend to align themselves with those who hold power. The top executives at San Miguel, the nation's biggest company, backed Grace Poe during the presidential election. But the company's president, Ramon Ang, swiftly changed his tune after the election, pledging to invest billions of pesos in Davao and Mindanao.
On the wrong side
Businesspeople who have chosen not to embrace Duterte have sometimes paid the price. Roberto Ongpin, the former chairman of online casino company PhilWeb and whom Duterte once described as an "oligarch" he wanted "to destroy," sold off his controlling interest in the business. It is not known if Duterte had an axe to grind.
In July, the Prieto family announced it was selling top broadsheet the Philippine Daily Inquirer to San Miguel's Ang after Duterte publicly slammed the paper for publishing reports that were critical of him. On Aug. 16, Duterte said he would evict the Prietos from a government property they are leasing.
The sailing has been far smoother for Uy, who has had the good fortune of being on the right side of politics. Last year, he was appointed as Duterte's official adviser for sports, and was tasked with helping the Philippines win its first Olympic gold at the 2020 Tokyo Games.
Uy insists that he does not use these ties to the top for personal gain. He cited the government's plan to impose a higher excise tax on petroleum products, which could threaten oil retailers like Phoenix. "I don't lobby," Uy said. "I just follow the rules."
Same passion, less swearing
Uy is just one member of an emerging clique of Philippine of tycoons riding high on the country's sizzling economic growth -- the second-quarter expansion of 6.5% was one of the biggest in Asia -- but the Phoenix CEO stands out for his sheer hunger to expand.
Like Duterte, who flies back to Davao almost every weekend, Uy is charismatic and passionate about his roots.
When it was suggested that moving Phoenix's headquarters to Manila would mean that most shareholders would not have to fly to Mindanao for the annual meetings, the CEO was unmoved. "So what?" he said. "I love Davao."
But unlike the firebrand president, who is known for occasionally using rough language, Uy is more tactful in his speech and has a far gentler demeanor.
The rise of the tycoon from far-flung Davao is symbolic of Duterte's dream of bringing the nation's riches to all corners of the country and not just allowing the power -- corporate and otherwise -- to remain concentrated in Manila.
The president's influence may have helped shape Uy's audacity, which will be tested once Duterte's popularity fades or his clout crumbles. The CEO, however, is confident that the business models he has created will succeed regardless of who calls the shots in the capital.