DP World, an Emirati multinational logistics company based in Dubai, United Arab Emirates, that operates world-scale port terminals, and the Canadian institutional investor — Caisse de dépôt et placement du Québec (CDPQ) declared an investment of $5 billion in 3 powerhouses of DP World’s flagship assets belonging to UAE.
The three flagship assets in question are the Jebel Ali Port, the National Industries Park, and the Jebel Ali Free Zone.
- Jebel Ali Port (JAB), is a deep port and the world’s ninth busiest port (and therefore the most successful). It is also the largest man-made harbour, and the biggest and supposedly the busiest port in the Middle East. Its importance and heritage make it a truly valuable asset.
- Jebel Ali Free Zone (JAFC) may only be one of the largest in the world, but it certainly takes the crown as the largest free zone in the Middle East. Under its wings are companies rooted out from around 140 countries, with the abundant 150 fortune 500 enterprises laying idly.
- National Industries Park (NIP) is a vast area designated for the sole purpose of being a sandbox for companies. Manufacturing and shaping them to their potential.
CDPQ is said to invest $2.5 billion in a brand new and shiny joint venture, in which it can carry a stake of the ballpark estimate of 22%. Whatever is left of the transaction may be financed by debt.
The opportunity to acquire an add-on stake of big numbers leading up to $3 billion is granted to long-term and loyal investors, who might surround it like vultures since this in its transactional regard will imply a total enterprise value of an estimated $23 billion for the flagships.
They are UAE’s golden assets for a reason. The Jebel Ali Port, National Industries Park, and the Free Zone together promise a state-of-the-art conglomeration infrastructure with an incredibly strong foundation that guarantees solid long-term growth in the records of benefits.
When tacked together, they form a superior integrated ecosystem within the assets for the supply and logistics chains of more than 8,700 nurture-dependant companies globally, serving over a quarter of the earth’s population every year. An official statement notes that these flagships generated Pro-forma 2021 revenue of $1.9 billion, a really impressive number on its own.
Regardless of being acquired by the DP World Group, the assets will see not much change in everyday operations. With its usual customers pouring in, its service providers and employees will not be touched as they would remain simply as fully consolidated businesses under their new pseudo-fathers.
DP’s CEO and Group Chairman has shed light on this matter. Sultan Ahmed Bin Sulayem is deeply delighted to share that the DP world and CDPQ cooperative investments have been quite exceedingly successful, courtesy of their expertise and long-term investment bracket. While presenting himself as his and CDPQ’s spokesperson, he hints at his excitement for this new partnership which would allow them to enhance their assets and help round up significant growth potential of the wider region. A truly brave step from them to bet highly on uncharted waters.
Bin Sulayem adds more details to his statement. He sheds light on the transaction’s role in reducing DP World’s net leverage to below 4x Net Debt to Ebitda. This is quite the feat they have achieved when we consider the recent global economic dead-end, credited to the still-easing pandemic situation and the most devastating Ukraine war aftermath in the general market.
They aim to strengthen the diversity in their portfolio and continued focus on leading factors like the ever-fluid supply chain solutions, which will act as an aid to their target of tying down a strong avant-garde and impactful rating for the group.
This investment is described as another illustration of the partnership and combined effort between CDPQ and DP World (now spanning across four continents and 18 terminals) by Emmanuel Jaclot, Executive Vice-President and Head of Infrastructure at CDPQ. Jaclot also emphasized this being a humble act of deepening their long-standing alliance by investing big money in this strategic trade infrastructure, a surely deemed one that ought to play a pivotal role in the evolution of the economy on a global, first-class scale.
It is an opportune time for CDPQ to partake in it, while simultaneously gaining exposure to newer, fast-growing markets and potential trade routes spanning across Africa and South Asia as well.
As per scheduled regulations, tranche 1 ($5 billion) of the bill will likely be settled close in the 2nd or 3rd quarter of this year, in tow lies tranche 2 (estimated $3 billion), which may flutter to its post in the final/fourth quarter of this year.