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Business

Companies use domestic success as springboard to new markets

Jollibee Foods plans to become Asia's top fast-food company. (Photo by Ken Kobayashi)

MANILA -- Impressed by its economic expansion, investors have branded the Philippines "Asia's rising star." And deals struck by domestic companies suggest they are not content just to stay in their backyard.

     From New Zealand to the U.K., Philippine companies are becoming global players. Emboldened by their domestic success, they are expanding into new markets. Last year, distiller Emperador acquired Scotch whisky maker Whyte & Mackay for 430 million pounds ($729 million at the time) in one of the biggest overseas acquisitions by a Philippine company. In May, Emperador said it was eyeing French cognac maker Louis Royer. Chairman Andrew Tan believes Whyte & Mackay will "potentially open up new opportunities in the Philippines and overseas in the long term." 

     Emperador, which in recent years has spent more than $100 million to buy 1,000 hectares of vineyards in Spain, has also introduced a line of brandy for the premium market in Southeast Asia, as it tries to replicate success at home. In the 1990s, Emperador challenged rum and gin makers who were dominating the domestic market. It has been so successful in cultivating a brandy culture in the Philippines that it became the world's largest producer in 2013, with 33 million cases.

     In a bold move outside its core markets, snack and beverage maker Universal Robina acquired Griffin's Foods, New Zealand's largest snack food company, for 700 million New Zealand dollars ($609 million at the time) from Pacific Equity Partners in July of last year. The deal is Universal Robina's first foray outside Southeast Asia and China, where it has a full-scale food processing and distribution network. Universal Robina CEO Lance Gokongwei in May said synergies between the companies are developing.

Hot streak

Bloomberry Resorts, which operates the Solaire Resort & Casino that opened two years ago in Manila, has struck a number of deals to move into South Korea, the company's first push abroad. Bloomberry, a sister company of International Container Terminal Services, which operates more than 20 overseas ports, has bought Silmi Island, which measures 210,000 sq. meters, and the adjacent 122,000-sq.-meter Muui Island. It also bought a stake in Golden & Luxury, which owns T.H.E. Hotel & Vegas, one of eight casinos on Jeju Island, off the southern coast of the Korean Peninsula.

     Enrique Razon, Bloomberry's chairman, said in May the company was ready to invest $1 billion in South Korea, which expects an influx of Chinese visitors in the coming years. Razon said he also wanted to build casinos in Japan and Taiwan when appropriate laws are passed.

     Jollibee Foods, the Philippines' largest fast-food chain, is looking to buy a restaurant operator in the U.S., Chairman Tony Tan Caktiong said in June. Jollibee considers the U.S. the third pillar of its plan to become Asia's top fast-food company. The other two markets are the Philippines and China, where it has a combined 2,744 stores or 92% of its worldwide network.

     Reggie Cariaso, managing director at Manila-based investment bank BPI Capital, said the success of these companies at home has boosted their confidence to make huge bets abroad.

     Emperador, Universal Robina, and Jollibee are market leaders in their home market, allowing them easier access to financing. The valuations of Philippine listed companies are also among the highest in the region, and interest rates are near record lows. 

     Meanwhile, some Philippine companies are exporting their technical expertise. Manila Water is helping Ho Chi Minh City with water supply and assisting Yangon with water treatment. Manila Electric, the Philippines' largest power company, has been involved in an electrification project in Nigeria.

     These companies demonstrate the growing confidence and capability of Philippine businesses to "compete with global entities for regional and international assets," Cariaso said.

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