Under the agreement, the Caisse will invest $2.5 billion in the Jebel Ali Port, the Jebel Ali Free Zone and the National Industries Park through a new joint venture in which it will hold a stake of about 22 per cent.
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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 Quebec’s public sector pension fund as the emirate seeks to alleviate its debt burden.
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Caisse de dépôt et placement du Québec agreed to invest $5 billion in the Middle East’s biggest port and two industrial zones, according to a statement. Other long-term investors will have the opportunity to acquire additional stakes for up to $3 billion by the end of the year.
Under the agreement, the Caisse will invest $2.5 billion in the Jebel Ali Port, the Jebel Ali Free Zone and the National Industries Park 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.
State-owned DP World has been exploring the sale of equity stakes in certain assets as the emirate works to reduce the debt pile that helped finance the city’s growth. Dubai took DP World private in early 2020 to help the company better manage its borrowings.
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Net Leverage
The deal “achieves our objective of reducing DP World’s net leverage” to below four times net debt to earnings before interest, taxes, depreciation, and amortization, Chief Executive Officer Sultan Ahmed Bin Sulayem said in the statement. “We believe this new partnership will enhance our assets and allow us to capture the significant growth potential of the wider region.”
With the investment, DP World “may be on track for an upgrade to BBB at Fitch as it could deleverage to below 5x net debt-to-Ebitda,” according to BI credit analyst Sharon Chen. “Its balance sheet may strengthen” and the deal “may help repay $7 billion of debt due 2023.”
