Dubai’s DP World, one of the world’s biggest shipping container terminal operators, is to raise $1.5bn by selling a 75 per cent stake in its Australian operations in its latest effort to shift focus towards emerging markets.
Citi Infrastructure Investors, part of the US’s Citigroup and one of DP World’s largest investors, will pay A$1.5bn (US$1.5bn) for the stake, DP World announced on Wednesday. The Dubai-based company, which manages terminals in Brisbane, Sydney, Melbourne, Adelaide and Fremantle, will continue to do so after the stake sale.
The operator said it would use the proceeds to pay down some of its $5.9bn net debt. Yuvraj Narayan, DP World’s chief financial officer, said the company would book a $300m profit on the transaction. DP World acquired most of the Australian operations during its £3.92bn takeover of the UK’s P&O in 2006, while it acquired the Adelaide and Brisbane operations through its $1.15bn 2005 takeover of US-based CSX World Terminals.
It is the first large-scale deal by an infrastructure fund to buy container terminals, since the credit crisis forced many such funds to financially restructure operations they bought at the height of the pre-crash boom.
DP World said the deal was unconnected with the continuing debt problems of Dubai World, the government-owned holding company that owns 80 per cent of DP World’s shares.
Mohammed Sharaf, DP World’s chief executive, said the company’s focus was now on emerging markets, including south-east Asia, Latin America and Africa. But he added that it did not necessarily follow, however, that the company would seek to sell stakes in all its operations in mature markets.
DP World has significant operations in Antwerp, Europe’s third-busiest container port; a new port under development at Shell Haven on the Thames near London; a stake in operations at the ports of Southampton and Tilbury in the UK; and terminal operations in Vancouver, Canada.
“We believe that this is one of the best models that we have today,” Mr Sharaf said of the Australian deal’s structure. “Their focus is on the infrastructure; our focus in on the infrastructure and operating that.”
The deal’s proceeds would allow DP World to look at opportunities in markets that would earn it better returns, he added.
DP World’s Australian operations handle around half of the containers moving in and out of Australia. Nearly all the others are handled by Sydney-based Patrick, the only other terminal operator at most of the ports covered by the deal. Hong Kong’s Hutchison Port Holdings, the world’s largest container terminal operator, entered the market in January 2008, signing a deal to operate a terminal in the port of Brisbane.
The company expected no problems with achieving competition clearance for the deal, Mr Narayan said.
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