Dec 05, 2016
Canada’s second largest pension fund and DP World have announced a C$5 billion (US$3.8 billion) joint venture that will invest in ports and terminals around the world, including Asia and Latin America. It’s another illustration of Canadian pension funds increasingly targeting investments in ports and terminals as reliable, steady sources of cash flow and with financial returns potentially exceeding publicly-traded stocks and bonds.
Dubai-based DP World, which operates some 77 marine and inland terminals and handles more than 170,000 TEU per day, will own 55% of the yet-unnamed investment platform, and the Caisse de depot et placement du Quebec (CDPQ) will control the remainder, according to a statement released on Dec. 2.
As a first step, the Caisse will acquire for C$865 million a 45% stake in two of DP World’s Canadian container terminals in the ports of Prince Rupert (seen in photo) and Vancouver, where capacity expansion is underway. DP World will also be taking over a container terminal at the Port of Saint John, New Brunswick in January.
DP World and the Caisse have also structured their agreement to allow up to one quarter of new investments to be allocated to greenfield projects - meaning they would not shy away from building something new from scratch as opposed to investing in an existing facility.
Michel Sabia, chief executive of the Montreal-based CDPQ, said the partnership will give the Caisse “access to high-quality transactions and the opportunity to invest in the best port infrastructure worldwide.”
Sultan Ahmed Bin Sulayem, chief executive of DP World, said that opportunities in the global port and terminal sectors are “significant.”
He said the partnership with the Caisse “offers us greater flexibility to capitalize on these opportunities while maintaining a strong balance sheet and retaining control. By combining our in-depth knowledge of container handling and CDPQ’s expertise in infrastructure investing and long-term horizon, we can continue to develop the port and terminal sector globally.”
The Caisse, which has about C$255 billion in net assets under management, has a 27% interest in Australia’s Port of Brisbane as part of its infrastructure portfolio.
Earlier this year, the Canada Pension Plan Investment Board was part of a group that purchased Australian port and rail operator Asciano Ltd. for A$9 billion. And the Ontario Municipal Employees Retirement System agreed, with partners, to buy a 50-year lease to operate the Port of Melbourne in Australia for A$9.7 billion.