CPDQ to invest $5bn in DP World as it looks to reduce debt

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Canadian pension manager Caisse de Depot et Placement du Quebec (CPDQ) will invest $5 billion in DP World’s Dubai assets as the global ports operator looks at ways to reduce its debt.

As part of the deal, CPDQ will take a 22 per cent stake in DP World’s Jebel Ali Port, Jebel Ali Free Zone and the National Industries Park. 

The Montreal-based pension fund will invest $2.5 billion through a new joint venture, with the remainder of the transaction being financed by debt. 

The transaction implies a total enterprise value of about $23 billion for the three assets.

Other long-term investors will have the opportunity to acquire an additional stake worth up to $3 billion in the joint venture, DP World said in a statement.  

“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, he added.

The first tranche of the transaction, the $5 billion investment, is expected to close in the second or third quarter of 2022, DP World said.

The second tranche, which entails investments of up to $3 billion, 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. 

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.

On May 26, DP World announced an initiative to explore metaverse technology to boost its operations and solve supply chain challenges.

The new platform, called DPMETAWORLD, is expected to be launched by the end of the year. 

It aims to use digital solutions and accelerate their adoption through the untapped capabilities of the metaverse, “helping drive efficiency and transparency,” they said.