Canada’s CDPQ pension fund has deepened its relationship with Dubai World – a state holding company – by buying up a 22% stake in a range of infrastructure assets in the Emirate.
The Québecois fund is committing US$5 billion in investment in three assets owned by DP World, a subsidiary of Dubai World which is a long-term investor that focuses on sectors that are strategic to the diversification of Dubai’s economy, including transport and logistics, drydocks and maritime, urban development, and investment and financial services.
CDPQ says it will invest US$2.5 billion in the Jebel Ali Port, the Jebel Ali Free Zone (JAFZA) and the National Industries Park through a new joint venture in which it will hold a stake of approximately 22%, with the remainder of the transaction being financed by debt. The three assets generated pro-forma 2021 revenue of US$1.9 billion, even at a time when the global economy was recovering from the impact of the pandemic lockdowns on supply chains. The three assets will remain fully consolidated businesses within the DP World Group. The transaction implies a total enterprise value of approximately US$23 billion for the three assets.
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 involving other parties) is expected to close during the fourth quarter of 2022.
Emmanuel Jaclot, Executive Vice-President and Head of Infrastructure at CDPQ, said: “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. 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.”
The deal creates significant liquidity for DP World, which has recently sought to diversify its exposure to a range of other geographies, including Senegal, Indonesia, South Africa and the UK.
DP World and CDPQ have developed a long-term investment partnership. Since its launch four years ago, the US$8.2 billion DP World-CDPQ platform has invested in 10 port terminals globally and across various stages of the asset life cycle. This investment will allow the partnership to pursue its objectives to further diversify its reach in terms of geography and trade lanes.
In December 2016, they announced the creation of a US$3.7 billion investment vehicle with DP World holding a 55% share and CDPQ the remaining 45%. It aimed at investing in ports and terminals globally, excluding the UAE. It was seeded with two of DP World’s Canadian container terminals, located on the Pacific Coast in Vancouver and Prince Rupert. In May 2019, the partners expanded their platform with the addition of terminals in San Antonio and Gran Concepción, Chile. In September 2020, DP World and CDPQ said they will explore opportunities to expand in existing and new geographies with new US$4.5 billion commitment CDPQ and DP World deepened their relationship further in March 2021, when they formed a strategic partnership with Maspion Group for a US$1.2 billion container port and industrial logistics park in Gresik, East Java, Indonesia.
Sultan Ahmed Bin Sulayem, Group Chairman and CEO, DP World, said: “In CDPQ we have found a partner with shared vision who is willing to participate in the risk and reward of investing throughout the life cycle of trade-enabling assets across the globe. By combining our in-depth knowledge of container handling and CDPQ’s expertise in infrastructure investing and long-term horizon, we can continue to develop the port and terminal sector globally.”