Caisse de Depot to invest US$5B in DP world’s Dubai assets

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Caisse de Depot et Placement du Quebec agreed to invest US$5 billion in DP World’s Dubai assets as the port operator looks at ways to reduce its debt.

As part of the deal, the Montreal-based pension manager will take a 22 per cent stake in DP World’s Jebel Ali Port, Jebel Ali Free Zone and the National Industries Park, according to a statement. It will invest US$2.5 billion through a new joint venture, with the remainder of the transaction being financed by debt.

The transaction “achieves our objective of reducing DP World’s net leverage” to below four-times net debt to earnings before interest, taxes, depreciation, and amortization, the port operator’s Chief Executive Officer Sultan Ahmed Bin Sulayem said. “We believe this new partnership will enhance our assets and allow us to capture the significant growth potential of the wider region.”

Other long-term investors will have the opportunity to acquire an additional stake of up to US$3 billion in the three assets, according to the statement.

State-owned DP World had been exploring the sale of equity stakes in certain assets as it works to reduce leverage and maintain its investment-grade rating. It agreed to buy the operator of the free zone in a US$2.6 billion deal in 2014.

More details about the deal:

  • Tranche 1 (US$5 billion) of the transaction is expected to close in the second or third quarter of 2022, and tranche 2 (up to US$3 billion) is expected to close during the fourth quarter of 2022
  • The transaction implies a total enterprise value of about US$23 billion for the three assets
  • The three assets generated pro-forma 2021 revenue of US$1.9 billion
  • The three assets will remain fully consolidated businesses within the DP World Group
  • Advisers on the transaction include Canaccord Genuity (Dubai), Citigroup, Deutsche Bank, Emirates NBD Bank, First Abu Dhabi Bank, JPMorgan Securities and Standard Chartered Bank