The Dubai-based operator will own 55 percent of a new vehicle targeting port and terminal investment opportunities outside of the United Arab Emirates, while Canadian pension fund Caisse de dépôt et placement du Québec will hold the other 45 percent.
DP World is partnering with Canada’s second largest pension fund to create a $5 billion Canadian (U.S. $3.7 billion) investment platform, the companies said in a joint statement.
The Dubai-based operator will own a 55 percent stake in a new vehicle targeting port and terminal investment opportunities outside of the United Arab Emirates, while Caisse de dépôt et placement du Québec (CDPQ) will hold the other 45 percent.
The investment vehicle will be seeded with two of DP World’s West Coast Canada container facilities – Centerm Terminal in Vancouver, British Columbia, and its Fairview Container Terminal in Prince Rupert – for which CDPQ will pay C$865 million for a 45 percent stake.
Although the new fund will invest primarily in existing assets, the companies said up to 25 percent of its investments will be in greenfield opportunities.
The deal allows DP World to recoup some of its investments in western Canada as it continues to build its operations on the east coast. In July, the company secured a 30-year concession for the operation of a container terminal at Port Saint John in New Brunswick beginning Jan. 1, 2017.
DP World has thus far been unsuccessful in entering the U.S. market, and the move to operate at Port Saint John was seen as an attempt to eventually compete with traditional U.S. cargo gateways along the eastern seaboard like the ports of New York and Boston.
For its part, CDPQ has also shown an increased interest in shipping and logistics investment opportunities. In October, the fund paid $155 million to acquire a “sizable” minority stake in Chennai, India-based third-party logistics provider TVS Logistics Services Ltd. from Goldman Sachs and KKR & Co.
CDPQ said at the time, it was prepared to commit “significant additional capital” beyond the initial equity investment to finance “transformative acquisitions and support the expansion of TVS LSL in India and globally.”
Sultan Ahmed Bin Sulayem, group chairman and CEO of DP World, said the joint investment platform with CDPQ would further improve the financial health of the company.
“The opportunity landscape in the port and terminal sector remains significant and this partnership offers us greater flexibility to capitalize on these opportunities while maintaining a strong balance sheet and retaining control,” he said.
“Through this new investment platform with DP World, a world-class port and terminal operator, CDPQ will have unique access to high quality transactions, and the opportunity to invest in the best port infrastructure worldwide,” CDPQ President and CEO Michael Sabia said.
“As a first step, we are pleased to announce two key investments in British Columbia,” he added. “We look forward to leveraging our in-house infrastructure expertise and DP World’s strong track record in the port sector to deliver attractive long-term returns for our clients.”
Canaccord Genuity, Dubai, acted as financial advisor to DP World and BMO Capital Markets acted as financial advisor to CDPQ in the agreement, which is still subject to the relevant regulatory approvals.
DP World partners with CDPQ to create $3.7b investment fund
