CII takes control of DP World's Australian assets

Citi Infrastructure Investors furnishes $1.5bn and management contract for majority stake in container terminals

By Rob McKay | December 22, 2010

DP World has sold 75 percent of its Australian stevedoring operations to Citi Infrastructure Investors (CII) for $1.5bn, the terminal operator revealed this afternoon.

Nearly fiive years after buying into the country through the purchase of P&O Ports, the Dubai-headquartered multinational says it will now provide management services to the Australian operation and management and staff of DP World Australia will be retained.

DP World Australia operates container terminals in Brisbane, Sydney, Melbourne, Adelaide and Fremantle.

For calendar 2009, DP World Australia generated gross earnings of $96m and the deal values the whole operation at $1.8bn.

The total proceeds will go towards reducing DP World’s net debt, which had ballooned due, in part, to the global financial crisis and had caused industry observers two years ago to speculate on a sell-off of its Australian assets.

DP World believes an ownership position in Australian stevedoring is not worth the investment, given its present needs.

"This strategic partnership provides a great opportunity for DP World to remain actively involved in Australia whilst delivering on our strategy to monetise assets as part of DP World’s ongoing goal to reduce leverage and focus on higher margin markets," DP World Chief Financial Officer Yuvraj Narayan says.

"This transaction, including the benefits of the long-term management contract, will be earnings accretive for DP World from the time of completion."

However, this did not seem to concern CII.

"We look forward to working with DP World's team in Australia and we are committed to ongoing investment in the business to ensure that DP World Australia continues to offer customers the highest level of service and is well positioned to meet future growth opportunities in this attractive market," Holly Koeppel, Co-Head of CII and chairwoman elect of DP World Australia, says

Completion, subject to regulatory approvals, is expected towards the end of the first quarter of 2011.

The deal does not involve changes for P&O Maritime Services.

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