By Mario Marroquin
International logistics firm DP World and Caisse de Dépôt et
Placement du Québec agreed this week to a 22% stake sale in three real
assets near Dubai’s Palm Jebel, an artificial archipelago that began construction in 2002.
CDPQ will form a joint venture with the logistics giant
through which it will invest $2.5 billion in the Jebel Ali Port, the Jebel Ali
Free Zone and the National Industries Park, and finance the balance of the $5
billion deal using debt.
The JV will consist of two investment pools of $5 billion
and $3 billion, respectively. CDPQ said the $3 billion investment pool will
remain open to other long-term investors.
“The transaction also achieves our objective of reducing DP
World’s net leverage to below 4X net debt to EBITDA and this has been achieved
despite the challenges of the pandemic and recent global economic conditions,” Sultan
Ahmed Bin Sulayem, DP World Chairman and CEO, said. “The significant
strengthening of our balance sheet, the continued resilience of our business,
diversity in our portfolio and continued focus on supply chain solutions will
support our target of achieving a strong investment-grade rating for the Group.”
The transaction is valued at $23 billion for the three
assets which, according to DP World, generated pro-forma revenue of $1.9
billion in 2021.
The Jebel Ali Free Zone is home to businesses from more than
140 countries and contributes to approximately 24% of Dubai’s GDP. Executives
from DP World and the free zone held a ceremonial groundbreaking in April
commemorating the start of construction at an industrial park that will add 500,000
square feet of industrial space to the free zone in 2023.
Reuters said the Jebel Ali port is the largest transhipment
port in the Middle East.
“DP World is well positioned to provide innovative solutions
to their customers worldwide, and 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 South Asia,” Emmanuel
Jaclot, executive vice president and head of Infrastructure at CDPQ, said.
The two investment pools that make up the JV will close in
the second half of 2022, according to CDPQ.
News of the strategic partnership comes weeks after CDPQ and
Fonds de solidarite FTQ, and the Bonduelle Group began negotiations for the
acquisition of a stake in Bonduelle’s North American business. The transaction
for a 65% stake in Bonduelle Americas Long Life is valued at C$850 million
(US$675.5 million).
DP World, which was taken private by Dubai World in 2020,
and CDPQ agreed to a $1.2 billion investment towards the construction of an
international port terminal and industrial real estate in Gresik, Indonesia, by
Maspion Group in 2021.
CDPQ reported a $14.4 billion allocation to real assets at
the end of 2021. The asset class delivered an annualized return of 4.8% in 2021
and a five-year return of 7%.
CDPQ and DP World agreed to a $4.5 billion investment in DP
World’s global portfolio in 2020, which followed a $3.76 billion partnership in
the portfolio in 2016, according to Reuters.
CDPQ held C$419.8 billion in assets under management as of
December 31.