A Canadian pension manager has agreed to invest $5bn into DP World’s Jebel Ali port and two nearby industrial zones.
Under the agreement, Caisse de Depot et Placement du Quebec (CDPQ) will invest $2.5bn in the port as well as the Jebel Ali Free Zone and National Industries Park.
It is doing the deal through a new joint venture in which it will hold a stake of about 22%, with the remainder of the transaction being financed by debt.
Other long-term investors will have the opportunity to acquire an additional stake of up to $3bn by the end of the year, DP World said in a statement.
The three assets will remain fully consolidated businesses within the DP World Group and day-to-day operations, customers, service providers and employees will not be affected, it added.
DP World said tranche 1 ($5bn) of the transaction is expected to close in the second or third quarter of 2022, and tranche2, up to $3bn, is expected to close during the fourth quarter of 2022.
The transaction values the assets, which are controlled by state-owned DP World, at about $23bn including debt.
It builds on an existing venture between DP World and CDPQ formed in 2016 to invest in ports around the world.
Montreal-based CDPQ said its partnership with Dubai-headquartered DP World now spans four continents and 18 terminals.
“Today, we are pleased to deepen our long-standing relationship with a world-class logistics and supply chain operator by investing in this strategic trade infrastructure, one that will play a pivotal role in the evolution of the global economy,” said CDPQ’s executive vice-president and head of infrastructure Emmanuel Jaclot.
“We welcome this opportunity to invest in a best-in-class group of infrastructure that provides CDPQ with exposure to new fast-growing markets and trade routes in Africa and SouthAsia.”
Jaclot told Bloomberg that CDPQ’s familiarity with the [DP World] management team helped it in doing this transaction.
“The zone of Middle East, Africa and South Asia is in a different growth trajectory, and this deal helps us to diversify our exposure to this high-growth region,” he added.
CDPQ is keen to further grow its infrastructure portfolio, which has doubled in the last three and half years, and transportation is a key focus area, according to Jaclot.
DP World chief executive Sultan Ahmed Bin Sulayem said the DP World and CDPQ co-investments have been “very successful thanks to our complementary expertise and long-term investment horizon”.
“The transaction also achieves our objective of reducing DP World’s net leverage to below four times net debt to ebitda and this has been achieved despite the challenges of the pandemic and recent global economic conditions,” he said.
DP World has been exploring the sale of equity stakes in certain assets as the emirate works to reduce the debt pile that helped finance the city’s growth.
Dubai took DP World private in early 2020 to help the company better manage its borrowings.
