DP World has announced that it has sold a stake in its main base, Jebel Ali Port, and other key assets to one of Canada’s largest pension funds for $5 billion.
The deal comes nearly two years after DP World struck a deal with Canadian Infrastructure Investor (CDPQ) to pump $4.5 billion of new capital into their joint venture, which spans four continents and 18 ports.
And “Bloomberg” reported that the Canadian “CDPQ” fund intends to acquire about 22% of “DP World” ownership in “Jebel Ali Port,” “Jebel Ali Free Zone,” and “National Industries Park” in Dubai.
It added that the fund will invest $5 billion in these assets, as it will inject $2.5 billion into the Jebel Ali Port, Jebel Ali Free Zone, and the National Industries Complex through a new joint venture, while the rest of the deal will be financed with debt instruments.
DP World CEO Sultan Ahmed bin Sulayem said in a statement that the deal “achieves our objective of reducing DP World’s net indebtedness to less than four times net debt to EBITDA.”
“We believe this new partnership will enhance our assets and allow us to tap into the significant growth potential of the broader region,” he added.
The deal gives the global pension fund the opportunity to “open up to new fast-growing markets and trade routes in Africa and South Asia,” said Emmanuel Jaclott, executive vice president of the Canadian fund.
Other long-term investors will have the opportunity to acquire an additional stake of up to $3 billion in the three assets, according to the statement.
The government-owned DP World was exploring selling stakes in certain assets in an effort to reduce debt and maintain its investment rating. It agreed to buy the free zone operator in a $2.6 billion deal in 2014.
Details of the transaction
The first tranche ($5 billion) of the deal is expected to be closed in the second or third quarter of this year, and the second tranche (up to $3 billion) is expected to be closed during the fourth quarter.
The deal involves a total value of approximately $23 billion for the three assets. The three assets generated initial 2021 revenues of $1.9 billion. They will remain fully-integrated businesses within the DP World group.
Advisers on the deal included Canaccord Genuity (Dubai), Citigroup, Deutsche Bank, Emirates NBD, First Abu Dhabi Bank, JPMorgan Securities, and Standard Chartered Bank.