Hutchison buys Hong Kong Port from DP World
Hutchison Port Holdings Trust, partly owned by the world's second-biggest container port operator, acquired a Hong Kong box terminal from DP World Ltd. and a partner as it seeks to benefit from rising trade in the South China region.
Hutchison Port will pay HK$3.2 billion ($413 million) in cash to buy the entire stake in Asia Container Terminal Ltd. from DP World and a unit of PSA International Pte, it said in a statement today. DP World also sold some other assets in Hong Kong to raise a total of $742 million, the Dubai-based company said in a separate statement.
The purchase
will
help Hutchison Port boost capacity at Hong Kong after container volumes gained in the past two years, according to Karen Li, an analyst at JPMorgan Chase & Co. DP World is selling its assets in the city as it seeks funds needed for expansion in other markets and shore up its capital.
"Our first take of the deal is that it is positive for Hutchison as this can help resolve its capacity constraints in Hong Kong," Li said.
"Following the strongerthan-expected volume growth over past two years, Hutchison is hitting the capacity bottleneck earliest this year, if current growth pace continues."
Hutchison Port rose as much as 0.6 percent to 79 cents as of 4:10 p.m. in Singapore trading. DP World was little changed at $13.10 as of 12:49 p.m. in Dubai. The stock has gained 12 percent this year.
Billionaire Li Ka-Shing's Hutchison Whampoa Ltd. (13), the world's second-biggest container port operator, owns 28 percent of Hutchison Port Holdings, according to data compiled by Bloomberg.
Hutchison Port handled 22.9 million 20-foot boxes last year at its facilities in Hong Kong and Shenzhen, 5 percent more than a year earlier. The company is also developing additional berths in the South China port.
DP World, the world's third-largest container port operator, sold a 55.2 percent stake in Asia Container Terminals to Hutchison Port for $279 million. It also offloaded 75 percent of its stake in CSX World Terminals Hong Kong Ltd. and ATL Logistics Centre Hong Kong Ltd. to Goodman Hong Kong Logistics Fund for $463 million. "The company is trying to focus its investments where it has great market share and control," Redwan Ahmed, a Dubai- based analyst at investment bank EFG-Hermes Holding SAE said by telephone.
"The company may reinvest this money in markets like India and Africa where there is a lot more growth potential."
DP World said it will form a strategic partnership with Goodman Hong Kong to manage Kwai Chung Container Terminal and the ATL Logistics Centre, and will continue to manage port operations with completion of the transaction expected at the end of the first half. The deal with Hutchison Port closed today, it said. DP World, majority owned by state-owned holding company Dubai World, said it expects to make a net capital gain of $151 million from the transactions, which will help maintain the company's capital position. The company had sold 75 percent of its Australia operations for $1.5 billion to Citi Infrastructure Investors and a partner in December 2010.
Container volumes rose 2.4 percent to 56.1 million twenty- foot equivalent units across it operations last year, the company said. Growth in gross container volumes was driven by the Americas, Asia Pacific and Middle East regions, where it focused on delivering improved efficiencies and productivity.
DP World, (DPW) which operates more than 60 terminals in six continents, is on track to open new capacity in Santos in Brazil, Jebel Ali in the United Arab Emirates and London Gateway in the U.K. this year.
"This reorganization, forming a strategic partnership and partially monetizing some assets, allows us to realize value and recycle capital into new, fast growing opportunities in other markets," DP World Chairman Sultan Ahmed bin Sulayem said in the statement.