CDPQ to Invest Up to $5B in DP World, Dubai Ports and Logistics

By Mario Marroquin

International logistics firm DP World and Caisse de Dépôt et Placement du Québec agreed this week to a 22% stake sale in three real assets near Dubai’s Palm Jebel, an artificial archipelago that began construction in 2002.

CDPQ will form a joint venture with the logistics giant through which it will invest $2.5 billion in the Jebel Ali Port, the Jebel Ali Free Zone and the National Industries Park, and finance the balance of the $5 billion deal using debt.

The JV will consist of two investment pools of $5 billion and $3 billion, respectively. CDPQ said the $3 billion investment pool will remain open to other long-term investors.

“The transaction also achieves our objective of reducing DP World’s net leverage to below 4X net debt to EBITDA and this has been achieved despite the challenges of the pandemic and recent global economic conditions,” Sultan Ahmed Bin Sulayem, DP World Chairman and CEO, said. “The significant strengthening of our balance sheet, the continued resilience of our business, diversity in our portfolio and continued focus on supply chain solutions will support our target of achieving a strong investment-grade rating for the Group.”

The transaction is valued at $23 billion for the three assets which, according to DP World, generated pro-forma revenue of $1.9 billion in 2021.

The Jebel Ali Free Zone is home to businesses from more than 140 countries and contributes to approximately 24% of Dubai’s GDP. Executives from DP World and the free zone held a ceremonial groundbreaking in April commemorating the start of construction at an industrial park that will add 500,000 square feet of industrial space to the free zone in 2023. 

Reuters said the Jebel Ali port is the largest transhipment port in the Middle East.

“DP World is well positioned to provide innovative solutions to their customers worldwide, and 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.

The two investment pools that make up the JV will close in the second half of 2022, according to CDPQ.

News of the strategic partnership comes weeks after CDPQ and Fonds de solidarite FTQ, and the Bonduelle Group began negotiations for the acquisition of a stake in Bonduelle’s North American business. The transaction for a 65% stake in Bonduelle Americas Long Life is valued at C$850 million (US$675.5 million).

DP World, which was taken private by Dubai World in 2020, and CDPQ agreed to a $1.2 billion investment towards the construction of an international port terminal and industrial real estate in Gresik, Indonesia, by Maspion Group in 2021.

CDPQ reported a $14.4 billion allocation to real assets at the end of 2021. The asset class delivered an annualized return of 4.8% in 2021 and a five-year return of 7%.

CDPQ and DP World agreed to a $4.5 billion investment in DP World’s global portfolio in 2020, which followed a $3.76 billion partnership in the portfolio in 2016, according to Reuters.    

CDPQ held C$419.8 billion in assets under management as of December 31.