COSCO Shipping Ports Limited (CSPL) and the Public Investment Fund (PIF) will acquire a total of 40% equity interest in Red Sea Gateway Terminal Limited (RSGT) for a total consideration of US$280 million.
[s2If is_user_logged_in()]According to RSGT official statement, the founding shareholders of the Saudi Arabian international terminal operator have signed separate share purchase agreements with the PIF and COSCO Shipping Ports, through its wholly-owned subsidiary Sound Joyce Enterprises Limited, for the sale of 20% to each company.
“Adding PIF and CSPL as shareholders will accelerate RSGT’s domestic and international growth plans,” said RSGT’s CEO Jens O. Floe who went on to add, “The transactions highlight the strong commercial proposition and service excellence of RSGT [whereas the new shareholders are expected to further strengthen our customer value proposition].”
The completion of both transactions is subject to the approval of the Saudi Arabian Ports Authority (Mawani), as well as other customary approvals, while the two transactions imply an enterprise value for RSGT of US$880 million.
Upon completion of both transactions, the Saudi and international investors, who founded RSGT in 2009, will retain the remaining 60% shareholding. Among RSGT founding shareholders are Saudi Industrial Services Company (SISCO), Xenel Industries and City Island Holding Limited, a wholly-owned subsidiary of MMC Corporation Berhad, a Malaysian conglomerate with extensive port operations.
RSGT will remain an independent terminal operator, focused on servicing its existing and future customers in the global logistics chain, according to an announcement.
In the meantime, the company has signed a new 30-year build, operate and transfer agreement with Mawani in December 2019, knows as the BOT Agreement, which envisages the investment of US$1.7 billion in automation, infrastructure, and equipment through 2050, in order to reach an annual throughput capacity of approximately 9 million TEU.
Under the BOT Agreement, in April 2020 RSGT expanded its handling capacity having assumed the operations of the northern section of Jeddah Islamic Port, previously known as the North Container Terminal (NCT). As a result, RSGT’s annual throughput capacity significantly increased from 2.5 million TEU in 2019 to 5.2 million TEU.
As the sovereign wealth fund of Saudi Arabia, PIF is the economic engine of Saudi Arabia’s Vision 2030 program for infrastructure and port development, with a clear strategy to drive the diversification of the Kingdom’s economy and become a global investment partner of choice.
The development of RSGT into both regional and global logistics hub supports PIF’s mission of unlocking new economic opportunities across the Kingdom and deploying patient capital to support emerging sectors with significant long-term growth potential, according to the announcement.
RSGT highlighted its potential significant role in achieving these objectives, capitalising on the country’s strategic location along the main Red Sea shipping routes.
Explaining its investment, CSP chairman Feng Boming said, “With the growth of maritime trade in the future, we believe that the container throughput at the Jeddah Islamic Port and Red Sea Gateway Terminal will keep growing in the future. In addition, after consolidation with the adjacent container terminal, RSGT will upgrade and increase the berth capacity while modernising the terminal yard and other supporting facilities. The new infrastructure and facilities will firmly establish RSGT as the largest logistics gateway, and the busiest container terminal, in Saudi Arabia, and on the Red Sea. Benefiting from a stable source of container volume, the acquisition is expected to boost the company’s throughput and profitability.”[/s2If]
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