Allen & Overy, Clifford Chance and Addleshaw Goddard are advising as global institutional investor CDPQ agrees to invest $5 billion in three of UAE-based ports and logistics concern DP World’s core home assets.
CDPQ will invest $2.5 billion in Jebel Ali Port, Jebel Ali Free Zone 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 firm said in a statement.
“Other long-term investors will have the opportunity to acquire an additional stake of up to $3 billion,” the firm said.
Canada’s second-largest pension fund, CDPQ, today manages net assets of C$420 million ($333 billion).
The transaction implies a total enterprise value of approximately $23 billion for the three assets. The $5 billion tranche 1 of the transaction is expected to close in the second or third quarter of 2022, while the $3 billion tranche 2 should close during the fourth quarter of 2022, Allen & Overy said.
“This significant transaction further deepens the existing partnership between CDPQ and DP World and positions CDPQ extremely well to maximise future opportunities in fast-growing markets,” said Richard Evans, London team-leader on the deal.
London partner Jocelyn Land led the team acting on debt financing aspects.
DP World, meanwhile, turned to Clifford Chance partners Deniz Tas (M&A) and Tariq Imam (real estate/infrastructure), with support from a Dubai contingent that included counsel Daniel Boyle and a team of associates, according to a statement by the firm.
DP World is expanding from being a pure ports operator into a provider of end-to-end logistics services and has seen containerized revenue fall from around 80% of the total in 2014 to only 45% in 2021, as overall company revenues increased from $3.4 billion to $10.8 billion over the same period.
“This transaction hits the sweet spot of our advisory offering, helping clients to navigate and execute complex, cross-border transactions with local expertise and insight wherever in the world they need it,” David Foster, who led the Dubai team, said.
“A deal of this size and scale is a great demonstration Dubai’s ability to create, develop and monetise world-class assets and validation of the long-term investment we have made in our team in the region.”
In 2016, CDPQ set up a $3.7 billion fund platform with DP World to invest in ports infrastructure around the world. In 2021, British International Investment announced a long-term investment of $720 million in three DP World facilities in Senegal, Egypt and Somaliland.
Ever-increasing containership capacities—now up to 24,000 twenty-foot equivalent units per vessel—have entailed the requirement for constant infrastructure and ship-to-shore crane upgrades to enable terminal operators to keep up with vessel size. Due to COVID-related port congestion, the world’s container shipping lines collectively made mammoth profits of $150 billion last year.
Last year, Dubai managing partner, Khalid Garousha, told Law.com International that Allen & Overy regarded itself as the leading legal practice in the Middle East region.
Addleshaw Goddard was contacted for comment.