DP World has blamed a ‘disconnect’ between equity markets and its long-term investment strategy for a decision to delist the Dubai ports and logistics provider in a $2.7bn deal.

It is part of a move by Dubai to ring fence the acquisitive global ports operator from its ultimate parent Dubai World, which faces its own debt renegotiations.

Port and Free Zone World - the Dubai World subsidiary that is the majority owner of DP World - is to pay $16.75 a share for the for 19.55% of the port company it does not already own.

The price is a 28.8% premium on the closing price of the shares on the Dubai Nasdaq on February 16.

Short-term returns

Sultan Ahmed bin Sulayem, group chairman and chief executive officer, DP World, said: "Returning to private ownership will free DP World from the demands of the public market for short term returns which are incompatible with this industry.”

It will also “enable the company to focus on implementing our mid-to-long-term strategy to build the world's leading logistics provider, backed by our globe-spanning network of ports, economic zones, industrial parks, feeders, and inland transportation.”

Port and Free Zone World is funding the deal through a new loan deal arranged with Citibank and Deutsche Bank, which see it also repay $5.15bn to Dubai World.

The payment was needed “to assist Dubai World in discharging its outstanding obligations to its commercial bank lenders, so that DP World can implement its strategy without any restrictions from Dubai World's creditors.”

DP World’s strategy is to move from being a ports operator to an “infrastructure-lead global supply chain solutions provider”. In addition to ports in around 50 locations worldwide, it owns P&O Ferries, Unifeeder, Topaz Energy & Marine and Continental Warehousing.

Investment returns

Yuvraj Narayan, Group Chief Financial, Strategy and Business Officer, DP World , said: "Delisting from Nasdaq Dubai is in the best interest of the company, enabling it to execute its medium to long-term strategy.

“DP World is focused on the transformation of the Group and takes a long-term view of investment returns and value creation. In contrast, public markets typically hold a short-term view.

“As a result of this gap, the DP World strategy is not fully appreciated by the equity markets, and consequently is not reflected in the company's share price performance."

DP World was listed in November 2007 at $27 a share before slumping after the global banking crisis to $3.50 in early 2009, and has fluctuated in value ever since.

In 2018, the last full year for which figures are available, DP World made net income of $1.3bn on revenue of $5.6bn.

Hamad Buamim of PFZW said: "We firmly believe that a delisting is in the best interests of DP World and the execution of its long-term strategy. We also believe that the Offer represents an opportunity to exit at an attractive premium for DP World's minority shareholders.”