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AD Ports Group has been steadily expanding its regional reach. The latest deal for Dubai-based GFS adds to its strengths as part of a longer term strategy. Image Credit: Supplied

Dubai: The AD Ports Group is buying 80 per cent in Dubai-based Global Feeder Shipping (GFS), which provides container shipping services, for Dh2.9 billion ($800 million). The deal size implies an enterprise value of Dh3.7 billion for GFS.

The investment ‘significantly broadens’ AD Ports Group’s global feeder shipping footprint and contributes to a long-term strategy to be ‘one of the world’s premier short-sea and feeder shipping players’. (The funding will be done through an acquisition loan.)

AD Ports Group will try to integrate GFS to its ‘Maritime Cluster’, which already offers shipping, offshore and subsea services. “Aligning GFS services with AD Ports Group companies Safeen Feeders and Transmar will make AD Ports Group the world’s largest independent feeder company by vessels owned, with an owned fleet of 35 vessels, and the third largest globally by volumes carried with a total container capacity of 100,000 TEUs,” the company said.

GFS had recorded $1.08 billion in the last 12 months, which delivered an EBITDA of $521 million and a net profit of $481 million. (The EBITDA margin works out to 48 per cent.)

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GFS owns and operates 26 vessels and has built up extensive network strengths. Pictured here are Amir Maghami, Chairman of GFS, and Mohamed Juma Al Shamisi, CEO of AD Ports Group Image Credit: Supplied

GFS has built one of the largest fleets of container ships, with 26 owned- and operated vessels with a capacity of 72,500 TEUs. These cover the Middle East, Indian Subcontinent and Southeast Asia with services connecting the UAE to India, Pakistan, Sri Lanka, Egypt, Sudan, Djibouti, Yemen, Saudi Arabia, Bahrain, China, South Korea, and Vietnam, among others.

"AD Ports Group has been on a journey of development throughout 2022, driven by both organic growth and prudent investments," said Falah Mohammed Al Ahbabi, Chairman of AD Ports Group. "Our acquisition of a majority stake in GFS, which is the largest external investment in our company’s history, will deliver a step-change in the range of services we can offer and significantly enhance our global connectivity.

"Our ambition is to become one of the world’s leading shipping companies, offering the most comprehensive range of maritime services, and this investment moves us significantly closer to achieving that goal.”

Leveraging the GFS deal
The GFS acquisition will boost AD Ports Group’s connectivity to core markets, as well as enhance the feedering business. This will provide 'significant economies of scale' through an expanded route network and fleet.

In addition, the acquisition will further strengthen the Abu Dhabi company’s hub-and-spoke model by linking core markets in the Gulf, Indian Subcontinent, Red Sea, and Turkey to its key port assets including Khalifa Port.