Dubai: Global ports operator DP World on Wednesday said it has sold a 75 per cent stake in its Australian operations for A$1.5 billion (Dh5.51 billion), a move that will help it reduce its net debt, company officials said.
Equity firm Citi Infrastructure Investors and unnamed investors bought the stake in DP World Australia and were waiting for regulatory approval that was expected by the end of the first quarter next year.
"We didn't go looking for this deal. It came to us. Citi wanted to be part of this portfolio in Australia. We were not out in the market looking for potential partners," DP World chief executive Mohammad Sharaf said yesterday.
DP World will hold a 25 per cent stake in the business and continue to operate and manage its Australian operations that comprise five marine terminals in Brisbane, Sydney, Melbourne, Adelaide and Fremantle.
They have a capacity of more than 3.5 million twenty-foot equivalent units per annum, approximately 50 per cent of the total Australian container market, the operator said.
"The total proceeds will go towards reducing DP World's net debt as part of our overall strategy to improve balance sheet flexibility," a company spokesman said.
DP World chief financial officer Yuvraj Narayan said the deal added to the current $2.7 billion (Dh9.917 billion) cash. The ports operator under parent company Dubai World has outstanding debt of $5.9 billion and an upcoming maturity of a $3 billion loan in 2012.
Immediate obligations
"We will have almost $4 billion on our balance sheet. There is enough to see us through all our short-term debt obligations," Narayan said.
Officials said they are looking into new investments in emerging markets.
"[The deal] provides a perfect opportunity to remain in Australia while reducing debt [and] explore in higher margin markets like South Asia," chairman Sultan Ahmad Bin Sulayem said.
Mohammad Ali Yassin, chief investment officer at CAPM Investment, said the deal "demonstrates that they have a lot of value in their assets, which is higher now than during the period of the Dubai World restructuring process."
The market took to the news well as DP World shares rose 6.31 per cent on Nasdaq Dubai, surpassing a two-year high.
Kareem Murad, logistics analyst at Shuaa Capital, said that the market did not price in such valuation multiples despite rumours for months of a possible deal. "Although the Australian ports added to the diversity of [its] portfolio, contributing to almost 7.6 per cent of equity adjusted throughput, growth prospects are relatively small compared to the other regions DPW is operating in," he said.
