DP World berthing in Novorossiysk
Together with RDIF the Company buys 49% of NUTEP
DP World (UAE) is getting ready for its first deal in the Russian market within the framework of joint venture with RDIF (Russian Direct Investment Fund). That entails purchase of 49% of Container terminal NUTEP, subsidiary to Sergey Shishkarev’s Delo Group, with an option of getting up to 100% after 2030. The sides are ready to close the transaction in the summer, but it requires the approval of the Government Commission on Monitoring Foreign Investments. In perspective NUTEP might become the center of consolidation of other Russian field-oriented assets.
Delo Group, Dubai Port World (DP World, United Arab Emirates) and RDIF have agreed on the terms of acquisition of 49% of OOO Container terminal NUTEP, said Kommersant’s source familiar with the course of the deal. RDIF specified that the sides had signed a preliminary agreement that “opens a possibility for a more detailed project study, after which they will make a final decision on exact terms of the transaction”. Delo Group explained that the transaction is now at the beginning stage, only the preliminary business terms. “Since we still need the approval of the Government Commission on Monitoring Foreign Investments, it would be prematurely to give any unfolded comments, – remarked in the Group. – The participants hope for the soon successful completion of the transaction”. DP World did not answer to Kommersant’s request.
NUTEP handles containers, general and Ro-Ro cargo in Novorossiysk port, throughput capacity – 350 thous. TEUs. In 2015 NUTEP handled 202.6 thous. TEUs, a 24% decrease year-on-year. Finances for 2015 are not disclosed; in 2014 NUTEP’s revenue was 2.34 billion rubles, EBITDA – 1.5 billion rubles. NUTEP is a part of Delo Group, which belongs to Sergey Shishkarev, the Group owns stevedoring, container and railway assets.
DP World belongs to the Government of the United Arab Emirates, it owns 70 terminals in 16 states. Revenue in 2015 – $3.9 billion, net profit – $883 million.
In January at Davos Forum RDIF and DP World signed an agreement establishing DP Russia (DPWR, with both parties getting 20% and 80% respectively), the joint venture will invest up to $2 billion in port, transportation and logistics infrastructure of Russia. It is DPWR that will become the co-owner of NUTEP. As one of the sources said, Delo Group creates a subsidiary Holland holding company, which will own 100% of NUTEP. DPWR will receive 49% of it, with Delo Group holding a control stake.
According to Kommersant’s sources, the cost of the transaction will be estimated based on NUTEP evaluation at $330 million minus the debt (not disclosed). The remaining amount will be divided – a half will go to Delo Group and another half will be set for investment and asset’s development purposes. In 2030 the RDIF will get a year-long option for purchase of additional 2% and in case of its application – obligation of buy-out the remaining 49% if Delo Group decided to sell it. The price range of this transaction will be determined according to the up to date DP World’s market multipliers.
Delo Group will assign the first Chairman of Board of Directors of the holding company. The Fund will have the majority in the Board of Directors, but key decisions will require not only the approval of the majority of the Board but the simultaneous approval of minimum one director of each side. According to the agreement DP World will not compete with Delo Group in the Russian part of the Black Sea, and will also give a right of first refusal to Delo Group – it means that DP World will first-hand offer Delo Group to participate in its all deals on Russian market.
According to the sources, there is examined the possibility of perspective consolidation of other profile assets on the basis of NUTEP, for example NSRZ – Novorossiysk Shipyard (NCSP – 65.2%, state-owned United Shipbuilding Corporation – 30.3%) or NLE – Novoroslesexport (NCSP – 91.4%). NCSP gave no comments. A source close to NCSP said that “there are big plans on NLE development and they’re definitely not planning to sell it”. Nadezhda Malysheva, editor of Portnews, says that the acquisition of a share of NUTEP by a foreign investor is positive news because DP World has money and is ready to invest it in Russian stevedore assets. Besides, the acquisition of the container terminal now, during the low market, signals the positive assessment of this market’s perspective recovery.