Saudi PIF, Cosco buy Red Sea Terminal stake for $280m
JEDDAH, July 15, 2021
Saudi's sovereign wealth fund Public Investment Fund (PIF) along with Cosco Shipping Ports has jointly bought a 40 per cent equity stake in Red Sea Gateway Terminal Limited (RSGT) for $280 million.
The investment will help to transform RSGT into both a regional and global logistics hub in line with PIF’s mission of unlocking new economic opportunities locally and globally.
RSGT will benefit and enhance its value proposition with the support of and a leading global ports operator like CSPL, which they will bring new momentum to the growth of RSGT’s business volume.
The RSGT location is on the main East-West trade routes, with close proximity to the main cargo end destinations on the West Coast of Saudi Arabia and captures significant intra-Red Sea trans-shipment cargo volumes.
Both new shareholders will help drive future growth on seaside and landside logistics.
As the economic engine of Vision 2030, PIF is driving the diversification of Saudi Arabia’s economy. The investment in RSGT for a 20 per cent stake come in line with its 2021-2025 strategy that focuses on 13 key priority sectors, including transport and logistics.
Saudi Industrial Services Company, the kingdom's leading strategic investor in ports and terminals, logistics parks and services, and water solutions, played a key role in the transaction with the divestment of its 21.2% direct equity stake in RSGT to PIF and Cosco.
For the deal, Sisco will be receiving a total gross proceeds of SR556.5 million ($148 million). The application of the proceeds, which is currently under review, will support the company’s strategic objectives of enhancing shareholder returns and optimising its portfolio.
In addition, LogiPoint has also divested its 4% direct equity stake in RSGT and will receive gross proceeds of SR105 million ($28 million).
With this deal, Sisco’s effective shareholding reduces from 60.6% to 36.36%, but the group will continue to consolidate RSGT from an accounting perspective.
RSGT officially declared the 40% equity sale today (July 15) following the completion of all necessary conditions and obtaining all regulatory approvals.
The transactions imply an enterprise value for RSGT of $880 million and a total gross inflow of equity value for the founding shareholders of $280 million.
As per the deal, the founding shareholders will reduce their combined shareholding to 60%.
CEO Jens O. Floe said: "This is a significant milestone for RSGT, demonstrating both our strength as a business and the confidence which the industry and investment community have in our strategic planning and implementation. Working closely with PIF and CSPL, we will accelerate our shared vision, further strengthen our customer offering, and elevate our mandate to meet the increasing demand for terminal and logistics services."
"RSGT will continue to focus on developing a niche emerging market operator with a keen focus on ports in the Red Sea and East Africa," he added.
Having commenced operation in 2009, RSGT is located at the world-class Jeddah Islamic Port, a crucial logistics hub serving as a global trade nexus linking Asia, Europe, and Africa, as well as an increasingly important regional business center.
Moreover, RSGT continues to bring excellence to the trade with the 30-year concession (BOT agreement) with Saudi Arabian Ports Authority (“Mawani”) – announced in late 2019 and commenced in April 2020.
On the deal, Sisco CEO Mohammed Al Mudarres said: "The conclusion of this milestone transaction serves to significantly improve the positioning of this key asset by bringing on board world-class strategic investors."
"The partnership with PIF and CSPL should boost RSGT’s growth trajectory, which will translate to growth and value for SISCO through our continued exposure as a key shareholder, both in terms of future net income and dividends from RSGT," stated Al Mudarres.
This transaction demonstrates the strength and attractiveness of Sisco’s portfolio both commercially and financially and supports its long-term strategy and track record for developing its portfolio businesses through strategic alliances to create value for shareholders, he added.-TradeArabia News Service
