DP World boosts stake in Australia unit upping value to A$1.4bn

The deal is expected to close in the first quarter of 2019

"We remain optimistic on the growth prospects in Australia and believe there is an exciting opportunity to enhance shareholder value," said Mr bin Sulayem. Pawan Singh / The National 

DP World, among the world's five largest port operators, has increased its stake in its Australian unit, a deal that will make it a majority shareholder and value the subsidiary at A$1.4 billion (Dh3.67bn).

The acquisition, which will have a neutral effect on earnings in the first full year of ownership, is expected to close in the first quarter of 2019 and subject to regulatory approval, the port operator said in a statement on Wednesday.

DP World is buying the additional stake, the size of which was not disclosed, from Gateway Infrastructure Investments and other financial investors. Corsair Infrastructure Partners, the manager of the Gateway Fund, will continue to manage a significant investment in the unit, the port operator added.

“We are pleased to announce this transaction that brings DP World Australia back into our consolidated portfolio, which presents a more optimal structure to drive this business forward, while continuing our relationship with CIP as a valued partner," said Sultan bin Sulayem, chairman of DP World. "We remain optimistic on the growth prospects in Australia and believe there is an exciting opportunity to enhance shareholder value by further developing the container terminals operations and expanding beyond the ports into logistics services.”

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DP World entered the Australian market in Adelaide, which it subsequently sold off, and Brisbane through its takeover of CSX World Terminals in 2004. The company then acquired of P&O in 2006, giving it a presence in Sydney, Fremantle and Melbourne.

The port operator sold a 75 per cent stake in its operations in Australia to Citigroup’s Citi Infrastructure Investors for A$1.5bn in December 2010, as part of its efforts to reduce its debt following the financial crisis of 2008.

DP World Australia’s terminals have a combined capacity of approximately 4 million twenty-foot equivalent units – the measure of container volumes. In 2017, the port handled 3.4 million TEUs and generated over $400m in revenue.