Dubai's DP World hires banks for sale of flagship free zone stake-sources

Gulf Island Fabrication

30/06/2021 09:46

By Saeed Azhar and Alexander Cornwell
    DUBAI, June 30 (Reuters) - Dubai's DP World has hired banks
to help sell a minority stake in its flagship business park,
Jebel Ali Free Zone, which could fetch a few billion dollars,
three sources familiar with the deal said.
    It hired JPMorgan  JPM.N , Standard Chartered  STAN.L  and
First Abu Dhabi Bank  FAB.AD  for the transaction that is likely
to draw interest from infrastructure funds, private equity firms
and other investors such as pension funds, they said.
    The deal may be funded using leverage finance, one of the
sources added.
    Located adjacent to DP World's flagship Jebel Ali Port in
Dubai, Jafza is one of United Arab Emirates' largest specialised
business parks, commonly referred to locally as a free trade
zone, where full foreign ownership is permitted.
    Jebal Ali's free zone hosts more than 8,000 companies now,
up from 500 in 1995, according to its website.
    "This business is like an annual annuity for investors, it
will only grow," a second source said.
    A spokesman for DP World said it does not comment on market
speculation.
    JPMorgan and Standard Chartered declined to comment, while 
FAB was not immediately available to comment.
    The sale plan could help reduce debt and help in funding DP
World's investment plans, the sources said.
    DP World's net leverage, or net adjusted debt/EBITDA
(earnings before interest, tax, depreciation and amortisation)
ratio, stood at 7.8 times, rating agency Moody's said in May,
adding that it is targeted by the company to come down to 4
times by 2022.
    DP World, one of the world's largest port operators, plans
$1.2 billion in capital expenditure this year after reporting an
11% rise in revenue to $8.5 billion for 2020.
    The government of Dubai indirectly owns 100% of DP World
through Port and Free Zone World FZE, a subsidiary of Dubai
World. (https://reut.rs/3y9c9qM)
    While DP World operates around 150 business units in 60
countries, the company has material exposure to Dubai, with
around 40% of the group's EBITDA in 2020 generated from its
Dubai assets - mainly from the Jebel Ali port and its free zone,
according to Moody's.

 (Reporting by Saeed Azhar and Alexander Corwnwell, editing by
Louise Heavens)
 ((Saeed.Azhar@thomsonreuters.com; +971 44536787; Reuters
Messaging: saeed.azhar.reuters.com@reuters.net))