DP World Partially Monetizes Canadian Assets

DP World will partner with a Canadian pension fund in a $3.7 billion investment vehicle that primarily looks at brownfield projects in investment-graded countries, says Drewry Maritime Equity Research.

The terminal operator will retain operational control of the fund with 55 percent stake, after seeding it with two west coast Canadian terminals (Prince Rupert and Vancouver). 

The pension fund Caisse de depot et placement du Quebec (CDPQ) will plough $640 million for the remaining 45 percent stake. Hence, the total start-up capital for the investment vehicle is $1.42 billion.

DMER view: "We have earlier commented on DP World’s leverage that will not be able to support its ambition – 100m gross TEU capacity target by 2020. he company could bolster its balance sheet by expanding capital base and/or paring stakes in some terminals."

"For the latter option, we looked at the possibility of monetizing DPW’s Indian Subcontinent concession. It has not materialized, but the pedigree of the latest deal stokes speculation. The latest transaction is in line with our thesis of balancing ambition and financial constraints."