How Dennis Uy built a business empire in 8 years
By Ian Sayson
Philippine tycoon Dennis Uy has built an empire spanning oil, shipping, casinos and telecommunications, but eight years ago his oil-trading business was in trouble over government allegations of fuel smuggling.
Dennis Uy (Bloomberg file Photo)
Uy went to see the local mayor, a family friend from childhood, for advice. The mayor was Rodrigo Duterte, the country’s current President.
“He said my image is soft, so I should practice before a mirror saying, ‘You son of a b****,’ 100 times,” Uy said in an interview in Manila. “He doesn’t like when a person is bullied.”
Uy says Duterte hasn’t played a direct role in his businesses, but the advice worked. He was cleared of the smuggling charges and went on to quadruple profit at his Phoenix Petroleum Philippines, Inc. in the five years through the end of 2018. Along the way, he says, he gained the toughness Duterte had been trying to instill in him.
“If you survived petroleum and shipping, it trains you to be battle-ready,” said Uy, 46. “In petroleum, to get your 1 peso margin, you watch everything from storage to trucking, and it’s common to give credit and deal with currency and oil price fluctuations.”
Before Duterte’s rise, the southern province of Davao was better known for its tropical fruit and an endangered species of monkey-eating eagle than for business powerhouses like Uy’s.
But in the past few years, Uy, who donated to Duterte’s presidential campaign, has spread far beyond the region, assembling assets that are eating into industries ruled by some of the country’s richest and oldest business dynasties.
In 2018, Uy’s teamed up with China Telecommunications Corp., to win a telecommunications license to challenge the duopoly of Smart Communications, Inc. and Globe Telecom, Inc. Uy had no previous experience as a carrier, but his company, now called Dito Telecommunity Corp., emerged as the sole bidder.
Duterte has repeatedly called for greater competition in the industry, which has some of the highest mobile rates and slowest service in Southeast Asia.
After Duterte encouraged the Chinese wireless giant to join the competition, Norway’s Telenor ASA and Austria’s Mobiltel AG, which had bought documents to participate, didn’t bid. Streamtech Systems Technologies, Inc., led by the Philippine’s richest person Manuel Villar, withdrew from the race.
Smart is owned by PLDT, Inc., whose Chairman Manuel Pangilinan has been repeatedly criticized by Duterte as an out-of-touch elite. The carrier’s largest shareholders include JG Summit Holdings, Inc., the banking, aviation and retail conglomerate now run by Lance Gokongwei, founder John Gokongwei Jr.’s son.
The other telecom operator, Globe, has Ayala Corp. as one of its largest shareholders. Ayala is led by Chairman Jaime Augusto Zobel de Ayala II, a frequent Duterte target.
President Duterte has also been a strong critic of the current telecommunications duopoly.
Uy also lacked experience in the gambling resort business, but won the first such license offered after Duterte became President, gaining permission to build a $300-million casino complex on a resort island in Cebu.
With a casino, Uy will be in competition with Enrique Razon, a third-generation heir of a ports and cargo empire who founded Bloomberry Resorts Corp., developer of the Solaire Resort and Casino in Manila’s Entertainment City suburb. Razon, with a net worth of about $4.6 billion, is the country’s richest person after Villar, according to the Bloomberg Billionaire’s Index.
Uy’s gambling resort will also put him in competition with the family behind Belle Corp., which owns a stake in Manila’s City of Dreams casino. Belle is part of the family-controlled empire built by the late Henry Sy. The Sy group encompasses BDO Unibank, Inc., Uy’s biggest creditor, and has a shipping and logistics venture with him, 2GO Group.
“You always have to look out for opportunities whether small or big or whether it’s aligned to what you’re doing or not,” Uy said. “We look at industries where we can be where we can be in the top 5, or where we have the means to compete or there is room to serve the customer better.”
Uy built his group on the foundation of Phoenix Petroleum, which he started in 2002, four years after the nation deregulated its oil industry. It is now the No. 3 Philippine gasoline retailer after taking market share from Royal Dutch Shell Plc.’s local unit and Petron by offering round-the-clock service to business clients such as Cebu Air, Inc., part of the Gokongwei group.
Uy’s surge into the ranks of Philippine conglomerates was largely financed by borrowing. Total debt has mushroomed from about ₱14 billion ($275 million) to ₱111.5 billion in the four years ended December 2018, based on the most recent regulatory filing from his Udenna Corp. holding company.
“His friendship with Duterte opened opportunities to enter into new business that he grabbed aggressively,” said Rachelle Cruz, an analyst at AP Securities, Inc. in Manila. “Uy’s main challenge now is making these businesses work and turning Udenna into a holding that would last beyond Duterte.”
Uy says his connection to the president isn’t the reason for his success.
“I am not close to the President,” he said in the interview. “He isn’t involved in any of our deals. He only gets to know from what he reads from newspapers.”
Uy said his aggressive expansion under Duterte is partly from confidence that the president has created a level playing that allows an outsider like him to do business.
“I’ve been always confident on the Philippines, but it’s different when you know the leadership and you are both from the same place,” Uy said.