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International Container Terminal Services, the Philippine ports group controlled by billionaire Enrique Razon Jr., has agreed to buy full ownership of TLG Acquisition Holdings, an integrated port and cargo handling operator running facilities in Mozambique, Namibia and South Africa.
ICTSI announced the deal on Friday, Aug. 28. It signed a sale and purchase agreement with African Infrastructure Investment Managers, which holds a combined 74% of TLG, and Mokobela Shataki Proprietary Limited, which owns the remaining 26%. The price was not disclosed. Closing depends on regulatory approvals and other standard conditions.
TLG handles bulk commodities and agricultural products across the three countries.
Razon owns 51% of ICTSI through direct and indirect holdings, which makes this his acquisition in a way that few listed company deals are. Forbes valued him at $21.8 billion in August, nearly double the $11.5 billion of a year earlier, and named him the richest person in the Philippines for the first time since he joined the list in 2007. He added $10.3 billion in twelve months, more in dollar terms than anyone else on the Philippine ranking, at a time when the combined wealth of the country's 50 richest fell 8% to $79 billion.
ICTSI shares are the reason. They rose 112% over the year, and the company's market value passed 2 trillion pesos, making it one of the most valuable listed businesses in the Philippines.
The earnings behind that run are substantial. ICTSI reported first-half net income of $589.98 million, up 22% from $483.84 million. Port operations revenue rose 27% to $1.92 billion and earnings before interest, tax, depreciation and amortisation climbed 24% to $1.23 billion. Stripping out a one-off charge from the sale of its Yantai terminal in China, net income would have risen 25% to $604.69 million.
Africa is not new ground for Razon. ICTSI already operates Durban Gateway Terminal in South Africa, which it added during the past year, and holds terminal interests in the Democratic Republic of Congo, where it has been investing in expansions and equipment. The TLG purchase gives it a direct operating footprint in three southern African markets at once.
The seller is a South African institution rather than a distressed owner. African Infrastructure Investment Managers is the infrastructure investment arm associated with Old Mutual, and it is exiting a business it built across a region where port capacity has been a persistent constraint on mineral and agricultural exports.
Razon, 66, has spent the past few years widening his interests well beyond shipping. He chairs Bloomberry Resorts, which operates the Solaire casino in Manila, took control of Manila Water, and holds stakes in the Malampaya gas field through Prime Infrastructure and in gold producer Apex Mining. ICTSI itself now runs terminals across Asia-Pacific, Eastern Europe, Africa and the Americas, and has announced planned investment this year in the Philippines, Mexico, Brazil, the Democratic Republic of Congo, Honduras, Australia and Ecuador.
What the African deal does not do is tell anybody what it cost. ICTSI has not published a figure, and TLG's financial performance is not public, which leaves the size of Razon's bet on southern African ports unstated until the accounts are consolidated.
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