International port operator DP World said on Monday it sold a stake in its home base, the Jebel Ali Port, and other flagship assets to one of Canada’s largest pension funds for $5 billion, expanding the Canadian group's reach into the crown jewel of the Dubai-based company's operation.
The transaction comes nearly two years after Dubai's DP World struck a deal with Canadian infrastructure investor Caisse de Dépôt et Placement du Québec, or CDPQ, to pour $4.5 billion of new capital into their joint venture already spanning four continents and 18 terminals.
DP World CEO Sultan Ahmed Bin Sulayem said the sale helps lighten the company’s debt burden as it faces "the challenges of the pandemic and recent global economic conditions,” an apparent reference to global supply chain snarls that have sent production and labor costs soaring.
Through a new joint venture, CDPQ will invest $2.5 billion in the Jebel Ali Port, as well as the Jebel Ali Free Zone and the National Industries Park, taking 22% of DP World's three major assets in the United Arab Emirates with the remainder financed through debt.
Other investors can acquire an additional stake of up to $3 billion, the companies said, with deals expected to close by the end of the year.
The Jebel Ali Port, one of the world’s largest that sits on the eastern side of the Arabian Peninsula, is also the region's busiest container-handling facility. The free zone adjoining the port is one of Dubai’s key economic development zones, allowing companies to sort and assemble products without the complications of clearing customs.
CDPQ's executive vice president, Emmanuel Jaclot, said the transaction gave the global retirement fund "exposure to new fast-growing markets and trade routes in Africa and South Asia.”
The assets will remain within the DP World Group, the companies said, with day-to-day operations unaffected.
DP World originated from Jebel Ali Port and now runs operations as far east as Brisbane, Australia, and as far west as Prince Rupert, Canada. The company has expanded aggressively into East Africa, helping the Emirati government wield influence farther afield.
DP World has returned to private hands and is now a wholly owned subsidiary of Dubai World, a government investment company. In early 2020, Dubai delisted the state-controlled company as it sought to pay back debt owed by the parent company amid an economic slowdown triggered by the 2014 collapse in oil prices and geopolitical turmoil.
