Canadian fund Caisse de Depot et Placement du Quebec (CDPQ) will invest $5 billion in three of DP World’s UAE assets Jebel Ali Port, the Jebel Ali Free Zone, and the National Industries Park. The Montreal-based pension fund will take a 22 percent stake in the three Dubai-based assets through a new joint venture with DP World, the Dubai-based global ports operator said in a statement on Monday. CDPQ will invest $2.5bn while the remainder of the transaction will be financed by debt.
The transaction “achieves our objective of reducing DP World’s net leverage” to below four-times net debt to earnings before interest, taxes, depreciation, and amortization, the port operator’s chief executive officer Sultan Ahmed Bin Sulayem said. “We believe this new partnership will enhance our assets and allow us to capture the significant growth potential of the wider region.” Other long-term investors will have the opportunity to acquire an additional stake worth up to $3bn in the joint venture, DP World said. The transaction implies a total enterprise value of about $23bn for the three assets.
State-owned DP World had been exploring the sale of equity stakes in certain assets as it works to reduce leverage and maintain its investment-grade rating. It agreed to buy the operator of the free zone in a $2.6bn deal in 2014.
“We believe this transaction provides a strong platform for the UAE assets to meet their long-term growth objectives, while the stronger balance sheet supports the group’s wider end-to-end supply chain solution strategy, which will drive sustainable value for all DP World stakeholders,” Sultan Ahmed Bin Sulayem, group chairman, and chief executive of DP World, said. The transaction “achieves our objective of reducing DP World’s net leverage” to below four times net debt to EBITDA, Mr bin Sulayem said.
The first tranche of the transaction, the $5bn investment, is expected to close in the second or third quarter of 2022, the company said. The second tranche, which entails investments of up to $3bn, is expected to close during the fourth quarter of 2022.
More details about the deal:
* Tranche 1 ($5bn) of the transaction is expected to close in the second or third quarter of 2022, and tranche 2 (up to $3bn) is expected to close during the fourth quarter of 2022
* The transaction implies a total enterprise value of about $23bn for the three assets
* The three assets generated Pro-forma 2021 revenue of $1.9bn
* The three assets will remain fully consolidated businesses within the DP World Group
* Advisers on the transaction include Canaccord Genuity (Dubai), Citigroup, Deutsche Bank, Emirates NBD Bank, First Abu Dhabi Bank, JPMorgan Securities, and Standard Chartered Bank
The UAE was among the top 20 economies globally last year that attracted foreign investment as inflows to the country rose 3.9 percent annually in 2021 to nearly Dh76bn. That led the total FDI balance in the country to rise by 13.7 percent from 2020 to about Dh630bn at the end of 2021, according to official data. The Emirates aims to attract Dh550bn in foreign investment by 2030, to eventually reach Dh1 trillion by 2051.
