Canadian fund Caisse de Depot et Placement du Quebec (CDPQ) will invest $5 billion in three of DP World's UAE assets --Jebel Ali Port, the Jebel Ali Free Zone and the National Industries Park.
The Montreal-based pension fund will take a 22 per cent stake in the three Dubai-based assets through a new joint venture with DP World, the Dubai-based global ports operator said in a statement on Monday. CDPQ will invest $2.5bn while the remainder of the transaction will be financed by debt.
Other long-term investors will have the opportunity to acquire an additional stake worth up to $3bn in the joint venture, DP World said. The transaction implies a total enterprise value of about $23bn for the three assets.
"We believe this transaction provides a strong platform for the UAE assets to meet their long-term growth objectives, while the stronger balance sheet supports the group’s wider end-to-end supply chain solution strategy, which will drive sustainable value for all DP World stakeholders," Sultan Ahmed Bin Sulayem, group chairman and chief executive of DP World, said.
The transaction "achieves our objective of reducing DP World’s net leverage" to below four times net debt to EBITDA, Mr bin Sulayem said.
The first tranche of the transaction, the $5bn investment, is expected to close in the second or third quarter of 2022, the company said.
The second tranche, which entails investments of up to $3bn, is expected to close during the fourth quarter of 2022.
"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 Canadian fund's stake in the JV will be through a sub-concession of up to 35 years, according to the statement.
Dubai attracted 618 foreign direct investment (FDI) projects in 2021, including greenfield as well as reinvestment projects and other forms of investment, with the value of FDI capital flows into the emirate estimated at Dh26bn ($7bn), up 5.5 per cent from the previous year.
DP World's three assets — including the Middle East’s biggest port and two industrial zones that have helped to transform Dubai into a global trade hub — generated pro-forma 2021 revenue of $1.9bn, according to the company.
Jebel Ali Port, an international gateway port and the second largest outside of Asia, serves the East-West trade corridor through its connectivity to 150 cities globally via more than 180 shipping lanes.
Jebel Ali Free Zone is the largest free zone in the Middle East and is home to companies from 140 countries, including approximately 150 Fortune 500 enterprises.
National Industries Park is a 21 square km area designated for manufacturing and processing companies.
The UAE updated and implemented reforms to more than 50 laws in all fields last year, paving the way for the adoption of new policies and regulations that will foster the country's competitiveness globally.
The UAE moved up a notch to 14th place in the latest FDI Confidence Index compiled by consulting company Kearney in 2021, despite lingering pandemic uncertainties and headwinds posed by the global geopolitical situation.
The UAE was among the top 20 economies globally last year that attracted foreign investment as inflows to the country rose 3.9 per cent annually in 2021 to nearly Dh76bn. That led the total FDI balance in the country to rise by 13.7 per cent from 2020 to about Dh630bn at the end of 2021, according to official data.
The Emirates aims to attract Dh550bn in foreign investment by 2030, to eventually reach Dh1 trillion by 2051.