Non-Subscriber Extract
Private sector takes a fresh look at potential of US ports
By Barry Parker
16 April 2009
The Port of Oakland, across from San Francisco, has announced a 50-year concession deal for a handful of berths in its Outer Harbor, with a company owned jointly by Ports America – an entity owned by private equity player Highstar Capital – and Mediterranean Shipping Co (MSC). RBC Capital Markets acted as financial adviser to the port on the transaction.
Shortly after the announcement of the Oakland deal, the Port of Virginia, a state entity operating four terminals in the Norfolk area, received an unsol¡cited proposal for a 60-year concession from CenterPoint Properties, an industrial real estate company with a portfolio that includes several inter-modal distribution centres under construction. A major investor in CenterPoint is the California Public Employees Retirement System (Calpers), the largest pension fund in the United States, managing assets of USD173.6 billion as of 31 January.
Mega-deals
The long-term nature of maritime terminal cashflows has enticed financial investors in recent years. From the investor side, a reason for renewed interest in the sector may be that prices of assets have come down to earth. During 2006 and 2007, a time of heightened interest in the ports sector, deals were done at prices reported to be in the range of 15 to 20 times annual cashflow.
Mega-deals from those years included Ontario Teachers Pension Plan splashing out USD2.4 billion to take out Orient Overseas International Ltd's (OOIL's) concessions in four North American terminals, and the Goldman Sachs-led Admiral Group spending a reported GBP2.8 billion (USD4.1 billion) in the privatisation of Associated British Ports.
In another high-profile deal during that timeframe, a Highstar Capital fund acquired what became the nu¡cleus of Ports America from P&O Ports. While a deal price was not announced, the transaction – in the wake of political opposition to DP World's acquisition of the US business of P&O Ports – was estimated to be worth between USD700 million and USD1 billion.