Quebec fund to invest US$5 billion in Dubai assets
Dubai is selling stakes in some of its most prized assets, including the port that helped transform the city into a global trade hub, to a Canadian fund as the emirate seeks to alleviate its debt burden.
Caisse de dépôt et placement du Québec agreed to invest US$5 billion in the Middle East's biggest port and two industrial zones, according to a statement Monday.
Other long-term investors will have the opportunity to acquire additional stakes for as much as US$3 billion by the end of the year.
Under the agreement, the Montreal-based pension manager will invest US$2.5 billion in the Jebel Ali Port, Jebel Ali Free Zone and National Industries Park.
It's doing the deal through a new joint venture in which it will hold a stake of about 22 per cent, with the remainder of the transaction being financed by debt.
The transaction values the assets, which are controlled by stateowned DP World, at about US$23 billion including debt.
It builds on an existing venture between DP World and CDPQ formed in 2016 to invest in ports around the world.
“The familiarity with the management team helped us in doing this transaction,” Emmanuel Jaclot, head of CDPQ'S infrastructure business, said in an interview Monday.
“The zone of Middle East, Africa and South Asia is in a different growth trajectory, and this deal helps us to diversify our exposure to this high-growth region.”
The transaction “achieves our objective of reducing DP World's net leverage” to below four-times net debt to earnings before interest, taxes, depreciation and amortization, the port operator's chief executive Sultan Ahmed Bin Sulayem said. “We believe this new partnership will enhance our assets and allow us to capture the significant growth potential of the wider region.”
State-owned DP World had been exploring the sale of equity stakes in certain assets as it works to reduce leverage and maintain its investment-grade rating.
It agreed to buy the operator of the free zone in a Us$2.6-billion deal in 2014.